Perera v. Siegel Trading Co., Inc.

• Decision Date: 16 January 1992
• Docket Number: No. 90-3508,90-3508
• Citation: 951 F.2d 780
• Parties: , 22 Fed.R.Serv.3d 209 Esther PERERA, Plaintiff-Appellant, v. SIEGEL TRADING COMPANY, INCORPORATED, an Illinois corporation, Frank Mazza and Howard Siegel, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 780

951 F.2d 780

60 USLW 2437, 22 Fed.R.Serv.3d 209

Esther PERERA, Plaintiff-Appellant, v. SIEGEL TRADING COMPANY, INCORPORATED, an Illinois corporation, Frank Mazza and Howard Siegel Defendants-Appellees.

No. 90-3508.

United States Court of Appeals Seventh Circuit.

Argued Sept. 26, 1991.

Decided Jan. 3, 1992.

As Amended Jan. 16, 1992.

Michael J. Freed, Kenneth Wexler, Much, Shelist, Freed, Denenberg, Ament & Eiger, Chicago, Ill., P. Terrence Buehler, Arthur T. Susman, Terry Rose Saunders (argued), Susman, Saunders & Buehler, Marvin A. Miller, Patrick E. Cafferty, Chertow & Miller, Chicago, Ill., Don Lolli, Beckett & Steinkamp, Kansas City, Mo., for plaintiff-appellant.

Fred A. Smith, William J. Kunkle, Jr. (argued), Steven J. Roeder, Pope & John, William M. Phelan, Thomas F. Burke, Phelan, Doyle, Bolotin & Burke, Lane M. Gensburg, David A. McGuire, Michael L. Siegel, Stone, McGuire & Benjamin, Dennis Bell, James McGurk, Bell & McGurk, Gary Sinclair, Chicago, Ill., for defendants-appellees.

Before BAUER, Chief Judge, WOOD, Jr., Circuit Judge, and ESCHBACH, Senior Circuit Judge.

HARLINGTON WOOD, Jr., Circuit Judge.

Esther Perera ("Perera") brought several claims of relief before the district court. The district court ordered Perera to proceed to arbitration of her claims. This appeal raises the question of whether an arbitration order entered as part of a proceeding for other relief is a final appealable decision under the recently enacted amendments to the Arbitration Act.

Perera, along with another plaintiff Alvin Champ ("Champ"), brought claims for relief under the Commodity Exchange Act, the Racketeer Influence and Corrupt Organizations Act, and various common law claims. On February 1, 1990, Siegel Trading Company, Incorporated, Frank Mazza and Howard Siegel ("defendants" or "Siegel") filed a motion in an attempt to proceed to arbitration of these claims. At this time the district court also had before it defendants' motion to dismiss the plaintiffs' complaint and the plaintiffs' motion for class certification. On February 23, 1990, the district court granted the defendants' motion to compel arbitration of Perera's claims, but refused to compel arbitration of Champ's claims. Because the court ordered Perera to proceed to arbitration, it did not consider the defendants' motion to dismiss Perera's claims nor did the court consider whether Perera could be certified as a class representative. The court granted partial dismissal of Champ's claims, and it determined that Champ would not be a sufficient class representative.

After the district court entered the February 23, 1990, order, Perera filed a motion for reconsideration asking that she be certified as a class representative in the arbitration proceedings. Pursuant to this request, on June 15, 1990, the district court entered an order certifying Perera as a class representative for arbitration.

Acting on the defendant's motion for reconsideration, on November 2, 1990, the district court revoked its June 15, 1990, certification of Perera as a class representative for arbitration. In this order the district court determined that Perera's and Champ's claims were distinct and, therefore, the district court bifurcated the parties' claims and directed that the two parties proceed in separate forums. Furthermore, the district court entered a Rule 54(b) judgment on its order compelling Perera to proceed individually to arbitration. Recognizing that a Rule 54(b) judgment might not be appropriate, the district court also invited this court to grant jurisdiction pursuant to 28 U.S.C. § 1292(b).

Perera argues that the district court erred when it failed to certify Perera as a class representative for arbitration. Nevertheless, we do not have the jurisdiction to review this issue because the district court's order to arbitrate is not a final decision under the Arbitration Act.

DISCUSSION

In determining whether we have jurisdiction to consider the propriety of the district court's refusal to certify Perera as a class Although not explicitly stated in her brief, Perera is apparently asserting that because the arbitration order is final, all the procedural decisions made in the process of reaching this order are also final and reviewable. More specifically, Perera apparently asserts that the district court's procedural decision not to certify the class for arbitration is reviewable as part of this final decision, just as many interlocutory procedural decisions made when setting a case for trial become reviewable after the jury renders a verdict and the district court enters judgment.

                representative for arbitration, it is important to closely scrutinize Perera's asserted basis for jurisdiction.   This can best be done by first focusing on what Perera is not asserting.   Perera is not asking us to exercise our discretion and certify this case for review under 28 U.S.C. § 1292(b).   Nor is Perera arguing that a refusal to certify a class for arbitration is a final decision under the Arbitration Act.   Instead, Perera asserts that the district court made a final appealable decision under the Arbitration Act when it directed Perera to proceed to arbitration
                

In 1988 Congress enacted an addendum to the Arbitration Act. This addendum contains provisions that control the appealability of district court arbitration decisions. These jurisdictional provisions were initially placed in section 15 of the Arbitration Act. However, in 1990 these jurisdictional provisions were renumbered and moved to section 16. See 9 U.S.C. § 16.

The recently enacted section 16 reads as follows:

(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.

(b) Except as otherwise provided in section 1292(b) of title 28, an appeal may not be taken from an interlocutory order--

(1) granting a stay of any action under section 3 of this title;

(2) directing arbitration to proceed under section 4 of this title;

(3) compelling arbitration under section 206 of this title; or

(4) refusing to enjoin an arbitration that is subject to this title.

9 U.S.C. § 16 (emphasis added).

Section 16 modifies much of the pre-1988 law regarding the appealability of district court orders pertaining to arbitration. Prior to the enactment of the amended Arbitration Act, the appealability of arbitration decisions was predominately dictated by two lines of cases: those cases that determined if particular arbitration decisions were final or interlocutory decisions under 28 U.S.C. § 1291 and those cases that determined if the Enelow-Ettelson doctrine allowed immediate appeal pursuant to 28 U.S.C. § 1292(a). See Whyte v. THinc Consulting Group Int'l, 659 F.2d 817, 818-20 (7th Cir.1981) (analyzing the appealability of an order staying judicial proceedings and directing arbitration under both 28 U.S.C. § 1291 and 28 U.S.C. § 1292(a)). In 1988 the amended Arbitration Act rendered the outdated Enelow-Ettelson doctrine inapplicable to the appealability of arbitration decisions. 9 U.S.C. § 16(a)(1)(A), (b)(1). Moreover, section 16 of the amended Act changed the rules regarding the appealability of certain interlocutory decisions. See 9 U.S.C. § 16(a)(1)(A-C).

Before section 16 was added to the Arbitration Act, an arbitration decision that did not qualify for either injunctive appeal under Although the statute explicitly revised and clarified the law by making both interlocutory and final orders disfavoring arbitration immediately appealable, the statute did not make similar explicit changes regarding the appealability of decisions favoring arbitration. Indeed, as for decisions favoring arbitration, the statute codifies the judicial distinction that existed prior to the enactment of the 1988 amendments: final decisions granting arbitration are appealable and interlocutory decisions granting arbitration are not. That is, section 16(a)(3) continues to allow immediate appeal of final decisions, while section 16(b) prohibits appeal of interlocutory decisions favoring arbitration.

                § 1292(a) or discretionary appeal under § 1292(b) was only appealable if it qualified as a final decision under 28 U.S.C. § 1291.   Section 16 changed this by making certain interlocutory judicial actions denying arbitration immediately appealable, 9 U.S.C. § 16(a)(1)(A-C), while not allowing the appeal of similar interlocutory orders granting arbitration.  9 U.S.C. § 16(b).   This differential treatment favors arbitration by assuring that orders denying arbitration are quickly reviewed so that if there is error arbitration can proceed and so that orders granting arbitration are followed without the delay of interlocutory appeals
                

In this case, Judge Hart entered an order directing Perera to proceed to arbitration, an order authorized by section 4 of the Arbitration Act. See 9 U.S.C. § 4. Perera argues that this order favoring arbitration constitutes a final decision appealable under section 16(a)(3) of the Act. Siegel argues that this is an interlocutory decision that is unappealable under section 16(b)(2)--section 16(b)(2) precludes the appeal of interlocutory section 4 orders compelling arbitration.

Perera's argument that we have jurisdiction over the district court's arbitration order is two-fold. First, Perera asserts that the legislative history underlying the amendments contained in section 16 indicates that an order to arbitrate all claims constitutes a final decision....