Devon Robotics, LLC v. DeViedma

• Decision Date: 05 August 2015
• Docket Number: No. 12–3676.,12–3676.
• Citation: 798 F.3d 136
• Parties: DEVON ROBOTICS, LLC ; Devon Health Services Inc.; John A. Bennett, M.D. v. Gaspar DeVIEDMA; McKesson Corporation Gaspar DeViedma, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

798 F.3d 136

DEVON ROBOTICS, LLC ; Devon Health Services Inc.; John A. Bennett, M.D.

v.Gaspar DeVIEDMA; McKesson Corporation Gaspar DeViedma, Appellant.

No. 12–3676.

United States Court of Appeals, Third Circuit.

Argued: Oct. 29, 2014.

Filed: Aug. 5, 2015.

Gary M. Samms, (Argued), Obermayer, Rebmann, Maxwell & Hippel Philadelphia, PA, Counsel for Appellees.

James P. Golden, (Argued), Hamburg & Golden, Philadelphia, PA, Counsel for Appellant.

Before: McKEE, Chief Judge, GREENAWAY, JR., and KRAUSE, Circuit Judges.

OPINION OF THE COURT

KRAUSE, Circuit Judge.

This appeal stems from a failed agreement to distribute robotic medical devices, but the issue before us is a threshold question of jurisdiction under the Federal Arbitration Act (the “FAA”). The case comes to us in the unusual posture of an interlocutory appeal from an order denying summary judgment, a type of order not normally before this Court, but one the Appellant urges us to sweep within the ambit of appellate jurisdiction under § 16 of the FAA on the ground that it is the equivalent of an order denying a petition to compel arbitration. We hold that § 16 does not sweep so broadly and therefore will dismiss this appeal for lack of jurisdiction.

I. Background

A. Factual History¹

Appellee Devon Robotics, LLC (“Devon”) acquired the rights to distribute two robotic medical devices, CytoCare and i.v. Station, from an Italian corporation, Health Robotics, S.r.l. (“Health Robotics”). Appellant Gaspar DeViedma (“DeViedma”), the general counsel for Health Robotics, negotiated the distribution contracts for both CytoCare and i.v. Station. Each contract contained an identical arbitration clause:

Disputes between the parties arising out of, in relation to, or in connection with this agreement or the breach thereof shall be finally settled by binding arbitration. Any arbitration shall be conducted in English under the rules of the International Chamber of Commerce by a single, mutually-agreed-to arbitrator and shall be held in Geneva, Switzerland.

(App. 153 n. 1.)

The CytoCare contract, which is the focus of this dispute, was executed in September 2008. By February 2009, CytoCare sales were not performing as the parties had hoped. To help Devon boost sales, the parties executed a Second Amendment to the CytoCare Distribution Agreement in which Health Robotics agreed to provide executive management consulting services to be performed by DeViedma. Pursuant to that amendment, DeViedma began acting as Devon's Chief Operating Officer (“COO”).

Over the next few months, Devon conducted negotiations with McKesson Corporation (“McKesson”) regarding a sublicensing agreement for CytoCare, but DeViedma allegedly obstructed McKesson's ability to complete a due diligence trip to Health Robotics's manufacturing facilities in Italy. Meanwhile, Devon failed to make franchise fee payments to Health Robotics, leading Health Robotics to draw down a $5 million line of credit that Itochu International, Inc. (“Itochu”) had extended to Health Robotics and Devon had guaranteed. In turn, this led Itochu to bring a suit against Devon to recoup the $5 million as well as an unrelated debt.

Shortly thereafter, in June 2009, DeViedma stopped serving as Devon's COO, and Devon and Health Robotics executed a Fourth Amendment to the CytoCare Distribution Agreement reflecting that the management consulting services had been terminated. Health Robotics then terminated its CytoCare contract with Devon altogether and entered into a direct agreement with McKesson, with DeViedma signing the termination letter to Devon in his capacity as Health Robotics's general counsel. Health Robotics also sent Devon a notice alleging breaches of their i.v. Station agreement, and DeViedma e-mailed several of Devon's hospital customers telling them that Devon faced financial difficulties and bankruptcy proceedings, and that Devon lacked staff qualified to manage i.v. Station robot installations.

B. Procedural History

Devon filed suit against DeViedma and McKesson in August 2009, claiming breach of fiduciary duty, tortious interference with current and prospective contractual relations, defamation, and conspiracy. In response, DeViedma filed a motion to dismiss on two grounds: first, that the complaint must be dismissed in favor of arbitration, and second, that Devon failed to state any claim upon which relief could be granted. The District Court granted the motion only in part.² DeViedma did not appeal that order, and extensive litigation followed. Over the next seventeen months, the parties expended considerable time and resources in discovery, producing hundreds of thousands of pages of documents and taking approximately twenty-six depositions.

DeViedma then filed a motion for summary judgment on the remaining two claims against him, which were for breach of fiduciary duty and tortious interference with current contractual relations. He repeated his argument that the claims against him could only be brought in arbitration in Switzerland. In the Memorandum and Order that are the subject of this appeal, the District Court rejected his arguments in favor of arbitration, but granted summary judgment on Devon's tortious interference claim, leaving only Devon's breach of fiduciary duty claim. DeViedma then filed this interlocutory appeal seeking our review of the District Court's order holding that Devon's claims were not subject to arbitration, and Devon moved to dismiss the appeal for lack of jurisdiction.

II. Discussion

Devon argues that there are three independent reasons we lack jurisdiction over this appeal: that the District Court's Order denying summary judgment is not appealable under § 16 of the FAA because it is not an order “denying an application under section 206 of [Title 9] to compel arbitration,” 9 U.S.C. § 16(a)(1)(C) ; that DeViedma's Notice of Appeal is defective because DeViedma inadvertently cited to 9 U.S.C. § 16(a)(1)(B) instead of 9 U.S.C. § 16(a)(1)(C) ;³ and that DeViedma waived his right to compel arbitration because he opted not to seek an interlocutory appeal of the District Court's denial of his motion to dismiss and instead engaged in protracted litigation.⁴

In such a situation, “there is no mandatory ‘sequencing of jurisdictional issues,’ ” and we enjoy “leeway ‘to choose among threshold grounds for denying audience to a case on the merits' ” in the order that best serves judicial economy. Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 431, 435–36, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584–85, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) ). We need not reach Devon's alternative arguments because we conclude we lack jurisdiction under § 16(a)(1)(C), and, therefore, this appeal must be dismissed.

A. Orders Appealable Under § 16(a)(1)(C)

In the ordinary course, we possess jurisdiction over only “final decisions of the district courts of the United States.” 28 U.S.C. § 1291. The FAA, however, provides for appellate jurisdiction of certain categories of interlocutory orders, including orders “denying an application under section 206... to compel arbitration.” 9 U.S.C. § 16(a)(1)(C). Devon contends that we lack jurisdiction under that provision because DeViedma is appealing from not an order denying an application under § 206 to compel arbitration but, rather, a motion for summary judgment in favor of arbitration, and “[t]he denial of a summary judgment motion is not a final order,” United States v. Spears, 859 F.2d 284, 286 (3d Cir.1988) (citing Boeing Co. v. Int'l Union, United Auto., Aerospace & Agric. Implement Workers of Am., 370 F.2d 969, 970 (3d Cir.1967) ).

In Harrison v. Nissan Motor Corp., 111 F.3d 343 (3d Cir.1996), we identified a similar issue: whether to interpret § 16 of the FAA as reaching the denial of a motion to dismiss in favor of arbitration. See 111 F.3d at 348. We acknowledged there is some logic to treating a motion to dismiss in favor of arbitration like a motion to compel arbitration under § 16, but also posited that “linguistically, a motion to dismiss, even for failure to pursue the statutorily provided threshold arbitral remedy, is a far cry from a ‘motion to compel arbitration.’ ” Id. at 349. Because we dismissed the appeal for lack of jurisdiction on different grounds, however, we did not reach the issue. We do reach it today and conclude that § 16(a)(1)(C) does not extend to denials of motions for summary judgment.

1. Statutory Text

Our analysis begins with the statutory text. Section 16 of the FAA provides that:

(a) An appeal may be taken from—

(1) an order—

(A) refusing a stay of any action under section 3 of this title,

(B) denying a petition under section 4 of this title to order arbitration to proceed,

(C) denying an application under section 206 of this title to compel arbitration,

(D) confirming or denying confirmation of an award or partial award, or

(E) modifying, correcting, or vacating an award;

(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or

(3) a final decision with respect to an arbitration that is subject to this title.

9 U.S.C. § 16(a). As the Supreme Court instructed in Green Tree Financial Corp.–Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000), “we apply the ‘plain language of the statutory text’ in interpreting the FAA.” Lloyd v. HOVENSA, LLC, 369 F.3d 263, 269 (3d Cir.2004) (quoting Green Tree, 531 U.S. at 88, 121 S.Ct. 513 ). “We do not look past the plain meaning unless it produces a result demonstrably at odds with the intentions of its drafters or an outcome so bizarre that Congress could not have intended it.” Mitchell v. Horn, 318 F.3d 523, 535 (3d Cir.2003) (citations and quotation marks omitted).

Further, the Supreme Court has repeatedly held that “statutes authorizing appeals are to be strictly construed.” Office of Senator Mark Dayton v. Hanson, 550 U.S. 511, 515, 127 S.Ct. 2018, 167 L.Ed.2d...