Dees v. Billy

• Decision Date: 19 January 2005
• Docket Number: No. 03-16004.,03-16004.
• Parties: Douglas DEES, Plaintiff-Appellant, v. Helmuth T. BILLY, M.D.; Gregory E. Ginn, M.D., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1290

394 F.3d 1290

Douglas DEES, Plaintiff-Appellant, v. Helmuth T. BILLY, M.D.; Gregory E. Ginn, M.D., Defendants-Appellees.

No. 03-16004.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 9, 2004.

Filed January 19, 2005.

W. Ruel Walker, Oakland, CA, argued the cause for the appellant; Carl M. Hebert, Reno, NV, was on the briefs.

Denise H. Greer, Schmid & Voiles, Los Angeles, CA, argued the cause for the appellees; Patricia Egan Daehnke, Bonne, Bridges, Mueller, O'Keefe & Nichols, Las Vegas, NV, was on the brief.

Appeal from the United States District Court for the District of Nevada; Howard D. McKibben, District Judge, Presiding. D.C. No. CV-02-00303-HDM.

Before O'SCANNLAIN, COWEN,^* and BEA, Circuit Judges.

O'SCANNLAIN, Circuit Judge.

We must decide whether we have jurisdiction to review a district court order that stayed the plaintiff's medical malpractice action, compelled arbitration, and administratively closed the case.

I

In February 1998, Douglas Dees was diagnosed by his family physician as suffering from elevated blood calcium levels and was referred to Drs. Helmuth Billy and Gregory Ginn ("Doctors") for treatment. During his first visit to the Doctors' office, Dees signed a one-page "Physician-Patient Arbitration Agreement," which provides that the parties will resolve any medical malpractice disputes through arbitration.¹ Dees claims that he was required to sign the agreement before seeing the Doctors and that the office staff did not explain the terms of the agreement to him.

In August 1998, the Doctors operated on Dees in an effort to alleviate his persistent disorder. Dees claims that his left phrenic nerve was negligently severed during the procedure, which resulted in the paralysis of his left lung, and he subsequently filed a complaint against the Doctors with the Nevada Medical-Legal Screening Panel. The Panel concluded that there was a "reasonable probability" that Dees had been injured by Dr. Billy's negligence,² and in May 2002, Dees filed a malpractice action against Dr. Billy in Nevada state court. Dees also named Dr. Ginn, who was Dr. Billy's employer, as a defendant on a respondeat superior theory.

The Doctors removed the case to the United States District Court for the District of Nevada on the basis of diversity of citizenship, and, invoking the Physician-Patient Arbitration Agreement, they petitioned the district court for an order compelling arbitration. In opposition to the Doctors' motion, Dees argued that the arbitration agreement was unenforceable because it was both unconscionable and a contract of adhesion under Nevada law. The matter was referred to a magistrate judge, who concluded that the agreement was valid and that the case should be submitted to arbitration. The district court affirmed the magistrate judge's decision and issued an order that stayed the action, compelled arbitration, and administratively closed the case.³ Dees filed a timely notice of appeal.

II

Dees argues that he is entitled to pursue his malpractice claim in a judicial forum because the Physician-Patient Arbitration Agreement is unconscionable and a contract of adhesion. Before we address the merits of Dees's appeal, however, we must resolve whether we have jurisdiction to review the district court's order.

A

The Federal Arbitration Act ("FAA") "represents Congress's intent to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible." Bushley v. Credit Suisse First Boston, 360 F.3d 1149, 1153 (9th Cir.2004) (internal quotation marks omitted); see also Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (referring to the FAA's "statutory policy of rapid and unobstructed enforcement of arbitration agreements"). Because the FAA "endeavor[s] to ... limit appeals from orders directing arbitration," Bushley, 360 F.3d at 1153 (internal quotation marks omitted; first alteration in original), a litigant may not appeal a district court's interlocutory order staying judicial proceedings or compelling parties to arbitrate a dispute, see 9 U.S.C. § 16(b)(1)-(2).⁴ Notwithstanding the fact that the trial court stayed the action and compelled arbitration, Dees contends that we possess jurisdiction to hear this appeal under 9 U.S.C. § 16(a)(3), which provides that an "appeal may be taken from a final decision with respect to an arbitration."

The Supreme Court has recently construed this section of the FAA. In Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000), the Court held that a "final decision" under 9 U.S.C. § 16(a)(3) is one that "ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment." Id. at 86, 121 S.Ct. 513 (internal quotation marks omitted). Pursuant to that definition, the Court held that appellate jurisdiction existed upon filing of a notice of appeal where a district court had granted a motion to compel arbitration and dismissed the action with prejudice. Id. The Court reasoned that the order "disposed of the entire case on the merits and left no part of it pending before" the district court. Id. The Court observed, however, that "[h]ad the District Court entered a stay instead of a dismissal in this case, that order would not be appealable." Id. at 87 n. 2, 121 S.Ct. 513.

In Bushley v. Credit Suisse First Boston, 360 F.3d at 1153, we relied upon Green Tree to hold that appellate jurisdiction was absent in an appeal from an order in which the district court compelled arbitration of the plaintiff's claims but did not rule upon the defendant's motions to stay and to dismiss. We held that the plaintiff's action was "effectively stayed pending the conclusion" of the arbitration and that the "district court's order therefore is not final and appealable under § 16(a)(3)." Id.; see also id. at 1153 n. 1 ("Courts should be aware that a dismissal renders an order appealable under § 16(a)(3), while the granting of a stay is an unappealable interlocutory order...." (internal quotation marks omitted)). Bushley can be contrasted with Interactive Flight Technologies, Inc. v. Swissair Swiss Air Transport Co., 249 F.3d 1177, 1179 (9th Cir.2001), where we held that a district court order compelling arbitration and dismissing the action without prejudice was an appealable final decision.

B

Unlike in Green Tree and Interactive Flight Technologies — where the district courts' orders were held to be immediately appealable — the trial court here did not dismiss Dees's medical malpractice claim. Rather, as in Bushley — where we held that appellate jurisdiction was absent — the trial court stayed the action and compelled arbitration. In an effort to evade the seemingly inescapable implications of this precedent, Dees contends that this order is nevertheless appealable because the trial court also directed that the case be administratively closed. Dees argues that such an order is the equivalent of a dismissal.

To support his expansive understanding of an administrative closing's implications, Dees relies primarily upon American Heritage Life Insurance Co. v. Orr. 294 F.3d 702 (5th Cir.2002). There, commercial lenders that had been sued by consumers in state court filed a separate action in federal district court seeking an order compelling arbitration of the state court proceedings. Id. at 706. The district court issued an order that compelled arbitration and closed the case without dismissing it. Id. at 706-07. The Fifth Circuit held that this order was immediately appealable because there was "no practical distinction between `dismiss' and `close' for purposes of this appeal." Id. at 708. Because the only relief sought by the commercial lenders was an order compelling arbitration and staying the state court proceedings, the district court had nothing left to do but execute the judgment. Id. The decision was therefore final for purposes of § 16(a)(3). See id. ("where a district court with nothing before it but whether to compel arbitration and stay state court proceedings issues an order compelling arbitration, staying the underlying state court proceedings, and closing the case, thereby effectively ending the entire matter on its merits and leaving nothing more for the district court to do but execute the judgment, appellate jurisdiction lies, as the decision is `final' within the contemplation of § 16(a)(3) of the FAA"); see also Green Tree Fin. Corp.-Ala., 531 U.S. at 86, 121 S.Ct. 513 (a final decision is one that "leaves nothing more for the court to do but execute the judgment" (internal quotation marks omitted)).

Dees's reliance upon American Heritage is misplaced. Unlike the district court in that case, the trial court here had more before it than simply the issue of arbitrability. While the plaintiff in American Heritage sought only to obtain an order compelling arbitration, Dees initiated this suit to recover damages for medical malpractice, and that claim — although currently stayed — remains before the trial court.

Indeed, Judge Dennis's American Heritage concurrence clarifies that the court's appellate jurisdiction derived not from the fact that the district court had closed the case but from the fact that the district court had entered a final decision by compelling arbitration in an action brought solely for that purpose. See Am. Heritage Life Ins. Co., 294 F.3d at 716 (Dennis, J., concurring). Judge Dennis emphasized that "[i]n proceedings where the litigants place more than the issue of arbitrability before the district court, an order compelling arbitration and closing the case is not equivalent to a final judgment of dismissal." Id. at 715 n. 9; see also id. at 715 ("the administrative closure... has no jurisdictional significance").

Judge Dennis's understanding of the American Heritage holding has been borne out by later Fifth Circuit decisions that...