Reid v. Doe Run Res. Corp.

• Decision Date: 13 November 2012
• Docket Number: Nos. 12–1065,12–1095.,12–1087,12–1080,12–1086,12–1092,12–1067,12–1081,12–1088,12–1079,12–1084,s. 12–1065
• Citation: 701 F.3d 840
• Parties: Sr. Kate REID, et al., Plaintiffs–Appellees v. DOE RUN RESOURCES CORPORATION, a New York Corporation; D.R. Acquisition Corp., a Missouri Corporation; Marvin K. Kaiser; Albert Bruce Neil; Jeffrey L. Zelms; Theodore P. Fox, III; Daniel L. Vornberg; The Renco Group, Inc.; Renco Holdings, Inc., a New York Corporation; Ira L. Rennert, Defendants–Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

701 F.3d 840

Sr. Kate REID, et al., Plaintiffs–Appellees

v.DOE RUN RESOURCES CORPORATION, a New York Corporation; D.R. Acquisition Corp., a Missouri Corporation; Marvin K. Kaiser; Albert Bruce Neil; Jeffrey L. Zelms; Theodore P. Fox, III; Daniel L. Vornberg; The Renco Group, Inc.; Renco Holdings, Inc., a New York Corporation; Ira L. Rennert, Defendants–Appellants.

Nos. 12–1065, 12–1067, 12–1079, 12–1080, 12–1081, 12–1084, 12–1086, 12–1087, 12–1088, 12–1092, 12–1095.

United States Court of Appeals,

Eighth Circuit.

Submitted: Sept. 19, 2012.

Filed: Nov. 13, 2012.

James F. Bennett, argued, Edward L. Dowd, Jr., Terrence J. O'Toole, James E. Crowe, III, Theodore J. Williams, Jr., Andrew Rothschild, Richard A. Ahrens, Thomas P. Berra, Jr., Michael J. Hickey, on the brief, St. Louis, MO, for appellants.

Michael A. Wolff, argued, Jerome Joseph Schlichter, Kristine K. Kraft, Roger Clark Denton, Elizabeth M. Wilkins, on the brief, St. Louis, MO, for appellees.

Before MELLOY and BENTON, Circuit Judges, and BAKER,¹ District Judge.

BENTON, Circuit Judge.

Doe Run Resources and its affiliates operated a smelting facility in Peru. The facility's pollution allegedly injured the plaintiffs. A Doe Run associate, Renco, is currently arbitrating related claims with Peru. The defendants sought both a mandatory and discretionary stay of this case pending the outcome of the arbitration. The district court ² denied the motions. The defendants appealed. This court affirms.

I.

Plaintiffs, thirty-five children living near the smelting facility, allege that environmental contamination injured them. The children claim that the contamination was caused by the owners and operators of the facility, the defendants: Doe Run Resources Corporation, The Renco Group, Inc., related companies, and executives at those companies (collectively “Doe Run”).

Before Doe Run's involvement, a state-owned company in Peru owned the facility. In 1997, Doe Run invested in, and later operated, the facility. The transaction occurred pursuant to a Stock Transfer Agreement (STA). Additionally, Peru separately guaranteed the obligations of the state-owned entity.

The children (along with others) originally sued in 2007, but voluntarily dismissed without prejudice. The children re-filed in 2008. In 2010, Renco filed a notice to commence arbitration with Peru. Renco sought to compel Peru to step in and defend claims against Renco; indemnify, release, and hold Renco harmless in third-party actions; and remediate the land near the facility. Doe Run removed this case based on 9 U.S.C. § 205, which grants federal jurisdiction of any case that “relates to” a covered arbitration. The children moved for remand, which was denied.

Doe Run moved to stay the proceedings pending the outcome of the arbitration based on (1) 9 U.S.C. § 3 mandating a stay when the issues are “referable to arbitration”; and (2) the district court's discretionary authority over its own docket. The district court denied the motion. A.O.A. v. Doe Run Res. Corp., No. 4:11CV44 CDP et al., 2011 WL 6091724 (E.D.Mo. Dec. 7, 2011). This interlocutory appeal followed.

II.

The children object to subject matter jurisdiction. This court must independently determine, at any stage of the litigation, whether it has jurisdiction. Hertz Corp. v. Friend, ––– U.S. ––––, 130 S.Ct. 1181, 1193, 175 L.Ed.2d 1029 (2010); Arbaugh v. Y & H Corp., 546 U.S. 500, 506, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006), citingFed.R.Civ.P. 12(h)(3). The children also argue that this court does not have pendent appellate jurisdiction over the discretionary-stay claim.

A.

The parties agree that the arbitration agreement falls under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Doe Run removed this case under the Convention, which allows for removal “[w]here the subject matter of an action or proceeding ... relates to an arbitration agreement or award falling under the Convention.” 9 U.S.C. § 205. The children contend that this suit does not “relate to” the arbitration.

The removal right in § 205 is “substantially broader” than that in the general removal statute. Ensco Int'l, Inc. v. Certain Underwriters at Lloyd's, 579 F.3d 442, 451 (5th Cir.2009). This court has not interpreted “relates to” in § 205; only the Fifth and Ninth Circuits have done so. The Fifth Circuit held that an arbitration relates to a plaintiff's suit when the arbitration “could conceivably affect the outcome of the plaintiff's case.” Beiser v. Weyler, 284 F.3d 665, 669 (5th Cir.2002). The Ninth Circuit agreed, noting that “[t]he phrase ‘relates to’ is plainly broad, and has been interpreted to convey sweeping removal jurisdiction in analogous statutes.” Infuturia Global Ltd. v. Sequus Pharm., Inc., 631 F.3d 1133, 1138 (9th Cir.2011). The Fifth Circuit further expanded its definition to include cases having some “connection,” “relation,” or “reference” to the arbitration clause. Acosta v. Master Maint. & Constr. Inc., 452 F.3d 373, 378–79 (5th Cir.2006).

In other contexts, this court has embraced the broad nature of “relates to” language. See, e.g., United States v. Weis, 487 F.3d 1148, 1152 (8th Cir.2007), quoting Morales v. Trans World Airlines Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (“The phrase ‘relating to’ carries a ‘broad’ ‘ordinary meaning,’ i.e., ‘to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with....’ ”); Estes v. Fed. Express Corp., 417 F.3d 870, 872 (8th Cir.2005) (“Estes's state law claims are preempted if the claims ‘relate to’ an employee benefit plan, 29 U.S.C. § 1144(a), such that they [1] ha[ve] a connection with or [2] reference to such a plan.” (alterations in original) (internal quotation marks omitted)); Dogpatch Props., Inc. v. Dogpatch U.S.A., Inc., 810 F.2d 782, 786 (8th Cir.1987) (“For a proceeding to be ‘related to’ a bankruptcy case for purposes of bankruptcy jurisdiction, courts require that it have some effect on the administration of the debtor's estate.” (internal quotation marks omitted)).

Joining the Fifth and Ninth Circuits, this court holds that a case may be removed under § 205 if the arbitration could conceivably affect the outcome of the case. Here, the issues in the arbitration could conceivably affect the outcome of this case. As the district court noted, the outcome of the arbitration could impact disputes at issue in this case, such as whether the pollution occurred when the defendants owned the facility, and whether the pollution caused children's injuries. Also, depending on the outcome of the arbitration, Peru might be a party in this case.³ While the children contend that the cases are completely independent and unrelated, either party could conceivably inject portions of the arbitration into this case. For example, if the arbitration panel found Renco completely liable for all environmental damage and injuries, the children could conceivably introduce that finding.

The children assert that no federal jurisdiction exists because the arbitration panel's ruling will not have preclusive effect and is only a tangential focus of this case. Their only support is In re Conoco EDC Litigation, 123 F.Supp.2d 340, 341–42 (W.D.La.2000), a district court case decided before Beiser and Infuturia (and is probably superceded by Beiser). At any rate, no circuit has required that an arbitration be preclusive in order for jurisdiction to be proper under § 205.

This case was properly removed under § 205.

B.

The children argue that this court does not have appellate jurisdiction of the discretionary-stay claim. The order denying the discretionary stay is neither a final judgment, nor an interlocutory order subject to appeal. 28 U.S.C. § 1291; 28 U.S.C. § 1292(a). Doe Run asserts jurisdiction under 9 U.S.C. § 16(a)(1), because this order “frustrate[s] attempts to resolve disputes through arbitration.” See Sourcing Unlimited, Inc. v. Asimco Int'l, Inc., 526 F.3d 38, 44 (1st Cir.2008). That assertion, however, ignores the plain language of the statute, which grants appellate jurisdiction over specific orders. 9 U.S.C. § 16(a)(1). Additionally, Sourcing Unlimited analyzes jurisdiction in the context of a specific order under 9 U.S.C. § 16(a)(1)(C). 526 F.3d at 44.

“Pendent appellate jurisdiction is appropriate only in exceptional circumstances.” Lockridge v. Bd. of Trs. of Univ. of Ark., 315 F.3d 1005, 1012 (8th Cir.2003) (en banc) (citations omitted) (internal quotation marks omitted). This court has pendent appellate jurisdiction over claims that are “inextricably intertwined” with claims over which this court has appellate jurisdiction. Id. Claims are inextricably intertwined when resolution of the direct claim “necessarily resolves” the pendent claim. Id.

The issues here are not inextricably intertwined. The question on the mandatory stay is whether the issues in this case are “referable to” arbitration. 9 U.S.C. § 3. To evaluate a discretionary stay pending arbitration, courts weigh three factors: (1) the risk of inconsistent rulings; (2) the extent to which the parties will be bound by the arbiters' decision; and (3) the prejudice that may result from delays. AgGrow Oils, L.L.C. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 242 F.3d 777, 783 (8th Cir.2001). Whether the issues in this case are “referable to” arbitration may relate to the AgGrow factors, but the determination does not “necessarily resolve” the discretionary-stay claim.

Doe Run argues that this court previously exercised pendent appellate jurisdiction over a permissive motion to intervene when appellate jurisdiction over a mandatory motion to intervene was present. See ACLU of Minn. v. Tarek ibn Ziyad Acad., 643 F.3d 1088, 1092 n. 2 (8th Cir.2011). In Ziyad, however, this court did not analyze whether the claims were inextricably intertwined, but relied on this court's Barnett opinion. Id., citing South Dakota ex rel. Barnett v. U.S. Dep't...