PaineWebber Inc. v. Farnam

• Decision Date: 11 April 1988
• Docket Number: No. 88-1169,88-1169
• Citation: 843 F.2d 1050
• Parties: PAINEWEBBER INCORPORATED, Plaintiff-Appellant, v. Franklin FARNAM, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1050

843 F.2d 1050

10 Fed.R.Serv.3d 1110

PAINEWEBBER INCORPORATED, Plaintiff-Appellant, v. Franklin FARNAM, et al., Defendants-Appellees.

No. 88-1169.

United States Court of Appeals, Seventh Circuit.

Submitted March 8, 1988.

Decided April 11, 1988.

Michael B. Roche, Schuyler, Roche & Zwirner, L. Andrew Brehm & Karen A. Mieszala, Chicago, Ill., for plaintiff-appellant.

James L. Schwartz, Fuchs, Temple & Berman, Ltd., Mark H. Schiff, Robert F. Fuchs, Chicago, Ill., for defendants-appellees.

Before FLAUM, EASTERBROOK, and RIPPLE, Circuit Judges.

EASTERBROOK, Circuit Judge.

The district court ordered PaineWebber, Inc., to arbitrate certain disputes with its customers. PaineWebber asked for a stay pending appeal. We denied the request for a stay and ordered PaineWebber to show cause why sanctions should not be imposed under Fed.R.App.P. 38. The order invited PaineWebber to discuss Graphic Communications Union v. Chicago Tribune Co., 779 F.2d 13 (7th Cir.1985), and Classic Components Supply, Inc. v. Mitsubishi Electronics America, Inc., 841 F.2d 163 (7th Cir.1988)--the former stating that stays of arbitration pending appeal are exceptionally hard to get, making casual or reflexive requests presumptively grounds for sanctions; the latter imposing sanctions on an unsupported request for a stay pending appeal.

PaineWebber's request for a stay of arbitration pending appeal does not cite a case or discuss the criteria that must be met to obtain such relief. One criterion is irreparable injury while the appeal proceeds. PaineWebber's motions papers do not discuss this subject. The closest approach is:

If the arbitration is permitted to proceed while this appeal is pending, PaineWebber's appeal will effectively be rendered moot.... [I]f arbitration proceeds while this appeal is pending, the arbitration hearing may take place before this Court reaches its decision in this appeal. In such event, PaineWebber would be deprived of any meaningful judicial review of [the district court's] order.

This is confused. True, the absence of a stay may mean that the arbitration will end before the appeal can be resolved. But if the arbitration takes place and the customers win, a decision by this court that PaineWebber was not required to arbitrate the dispute will produce victory for PaineWebber. If PaineWebber wins the arbitration, it prevails no matter what happens on appeal. The only feature of the case that becomes "moot" is whether an arbitral hearing will be held--which would be significant only if the cost and travail of holding a hearing were irreparable injury.

Chicago Tribune was a similar case. The newspaper wished to avoid arbitration with a union. It argued that it would suffer irreparable injury during the appeal if the arbitration were not stayed, because the time, energy, and money invested in presenting the case to the arbitrator could not be reclaimed if the order to arbitrate were erroneous. We rejected that contention, holding that the ordinary incidents of litigating (or arbitrating) a case are not "irreparable injury". 779 F.2d at 15. So much has been settled for a long time. Petroleum Exploration, Inc. v. Public Service Commission, 304 U.S. 209, 222, 58 S.Ct. 834, 841, 82 L.Ed. 1294 (1938), calling this principle "abiding and fundamental". See also, e.g., FTC v. Standard Oil Co., 449 U.S. 232, 244, 101 S.Ct. 488, 495, 66 L.Ed.2d 416 (1980); Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. 1, 24, 94 S.Ct. 1028, 1040, 39 L.Ed.2d 123 (1974). We continued:

We are not gifted with prevision, and therefore we decline to say that a party ordered to arbitrate can never show irreparable harm.... But we are confident that such cases will be extraordinarily rare, ... that employers who seek stays merely on the ground that the arbitration may turn out to be a wasted expense of time and money are whistling in the dark, and that we will not hesitate to mete out sanctions in future cases to persons who make applications for stays of arbitration in circumstances such as disclosed by the record of this case.

Id. at 16. The circumstances of this case track those of Chicago Tribune, and we therefore impose sanctions on PaineWebber.

PaineWebber, which did not mention "irreparable injury" in its motions papers, perforce did not distinguish its case from Chicago Tribune. In Classic we imposed sanctions on another applicant who neglected to address the subject; even-handed treatment of PaineWebber calls for the same outcome. PaineWebber's response to the order to show cause argues at length that it could have shown irreparable injury, but this is too late. The question is not what a litigant could have said but what it did say. In re Ronco, Inc., 838 F.2d 212, 218-29 (7th Cir.1988). We require applicants to pay their adversary's attorneys' fees in cases such as this because a motion ignoring controlling precedent forces the other side (and the court) to spend time finding the precedents that the movant should have found...