Taylor v. Nelson

• Decision Date: 11 April 1986
• Docket Number: 85-1992,Nos. 85-1948,s. 85-1948
• Citation: 788 F.2d 220
• Parties: Donald F. TAYLOR, Appellee, v. Willie NELSON, t/a Willie Nelson & Family, Appellant, and Johnny Paycheck, t/a Johnny Paycheck & The West Texas Music Co.; Buddy Lee Attractions, Inc., a Tennessee Corporation; Joe Harris, Defendants. (Two Cases)
• Court: U.S. Court of Appeals — Fourth Circuit

Page 220

788 F.2d 220

54 USLW 2537

Donald F. TAYLOR, Appellee, v. Willie NELSON, t/a Willie Nelson & Family, Appellant and Johnny Paycheck, t/a Johnny Paycheck & The West Texas Music Co.; Buddy Lee Attractions, Inc., a Tennessee Corporation; Joe Harris, Defendants. (Two Cases)

Nos. 85-1948, 85-1992.

United States Court of Appeals Fourth Circuit.

Argued Jan. 6, 1986.

Decided April 11, 1986.

Jay Goldberg (Michael G. Berger, Jay Goldberg P.C., New York City, Carroll D. Rea, Dudley F. Woody, Woods, Rogers & Hazelgrove, Roanoke, Va., on brief), for appellants.

Martin E. Silfen (Silfen & Glasser, P.C., New York City, Charles L. Williams, Linda Davis Frith, Gentry, Locke, Rakes & Moore, Roanoke, Va., on brief), for appellee.

Before PHILLIPS and MURNAGHAN, Circuit Judges, and WILLIAMS, United States District Judge for the Eastern District of Virginia, sitting by designation.

JAMES DICKSON PHILLIPS, Circuit Judge:

Defendant Willie Nelson appeals from an order denying his motion for a stay pending arbitration and from an order vacating on the ground of evident partiality an arbitration award in favor of Nelson against plaintiff Taylor, 615 F.Supp. 533. We hold that this court has jurisdiction to consider Nelson's appeals, and that the motion by Taylor to vacate the arbitration award was not filed within the three-month limit prescribed by the Federal Arbitration Act. We vacate the order of the district court vacating the arbitration award, and remand for entry of an order granting Nelson's motion to confirm the arbitration award.

I

In 1980, Nelson, a professional musician, contracted with Taylor, a promoter, to perform at a music festival sponsored by Taylor. Their agreements were embodied in written form contracts of the American Federation of Musicians (AFM), the national musicians' union. The contract provided that all claims, disputes, controversies, or differences involving the musical services arising out of or connected with the contract and attendant engagement would be settled by the rules and constitution of the AFM, which in turn provided for a system of commercial arbitration administered by the AFM. The contract further provided that this method of resolution "shall be conclusive, final and binding...."

Nelson failed to appear at the music festival, with predictable consequences. Shortly thereafter, Taylor filed a diversity action against Nelson in the Western District of Virginia, alleging various claims, including breach of contract, tortious interference with contract, conspiracy to tortiously interfere, libel and conspiracy to libel. Nelson filed a timely motion for a stay of proceedings pending arbitration, but the district court denied this motion. On an interlocutory appeal, this court vacated the order denying the stay and remanded with directions to grant the stay pending arbitration.

An arbitration proceeding was conducted in 1984, and an arbitration award was issued in favor of Nelson on September 11, 1984. On September 21, Nelson petitioned in a New York state court for confirmation of the arbitration award. Although the award had been rendered in New York by the executive board of the AFM, Taylor opposed the state court motion on the grounds that the earlier action stayed in favor of the arbitration was still pending in the Virginia federal court. The New York court agreed that it should not hear Nelson's petition to confirm, and on February 1, granted Taylor's cross-motion to dismiss.

On February 2, 1985, Taylor moved in the district court to vacate the arbitration award. Nelson filed a motion to confirm the award and to dismiss the underlying civil action on April 10, 1985. In an order dated August 19, 1985 (the August 19 order), the district court vacated the arbitration award on the ground of evident partiality, and rejected Nelson's claim that the motion to vacate had not been timely filed within the three-month limitation period set out in the Federal Arbitration Act, 9 U.S.C. Sec. 12 (1982). The August 19 order also denied Nelson's motion to confirm the arbitration award.

The district court then denied Nelson's motion to certify the August 19 order for interlocutory appeal, and Nelson noticed an appeal from the order on September 6. After the district court refused a subsequent motion requesting a stay of the district court proceedings pending appeal, Nelson moved on September 13 for the appointment of a new arbitrator and a stay of the district court proceedings pending a new arbitration. By an order dated September 13 (the September 13 order) the district court denied this motion. Nelson then noticed an appeal from the September 13 order. Nelson's appeals were consolidated, and this court granted his motions to stay the district court proceedings pending appeal.

II

Taylor contends that neither the August 19 nor the September 13 orders are appealable, and that this court is without jurisdiction to consider Nelson's claims. We address separately our jurisdiction over the appeals from each order.

A

Following the vacation of the arbitration award, Nelson sought to have a new arbitration ordered and a substitute arbitrator appointed. The September 13 order denied the request for a second arbitration, and refused Nelson's motion for a stay pending arbitration.

The parties do not dispute the general rule that an order denying a stay pending arbitration is immediately appealable as an interlocutory order equivalent to an order denying an injunction. See 28 U.S.C. Sec. 1292(a)(1) (1982). See generally Federal Civil Appellate Jurisdiction: An Interlocutory Restatement, Law & Contemp. Probs., Spring 1984, Sec. 18(C) comment c, at 131-34. Taylor contends that this order refusing a stay is non-appealable, however, and bases this jurisdictional argument upon an assumption that Nelson is not entitled to a second arbitration and that to appoint a new arbitrator would unjustly delay the proceedings below.

If a contractual right to arbitration exists, Nelson's argument that the proper forum after the vacatur is a new arbitration is not patently without merit. Indeed, new arbitrations have been ordered by other courts following the vacatur of a prior arbitration award, see, e.g., Graham v. Scissor-Tail, Inc., 28 Cal.3d 807, 171 Cal.Rptr. 604, 623 P.2d 165, 180 (1981), and the strong federal policy favoring arbitration, as embodied in the Federal Arbitration Act, 9 U.S.C. Secs. 1-14 (1982), counsels such a result. Thus, just as an appellate court has jurisdiction on an interlocutory appeal to interpret a contract to determine the existence and scope of an agreement to arbitrate, this court has jurisdiction to determine whether there is a further duty to arbitrate once an initial arbitration award is vacated. Because there is no reason to depart from the rule conferring appellate jurisdiction over orders denying stays pending arbitration, we have jurisdiction under Sec. 1292(a)(1) to consider whether Nelson has a right to a second arbitration.

B

Taylor also urges that a vacatur is not a final order, and is not within the finality exceptions of 28 U.S.C. Sec. 1292, so that we have no jurisdiction over Nelson's appeal from the August 19 order. We agree that an appeal from the order vacating the arbitration award is not within Sec. 1292(a)(1). See Sentry Life Insurance Co. v. Borad, 759 F.2d 695 (9th Cir.1985). In Sentry, the appellant attempted to liken an appeal from a vacatur to an appeal from an order denying a stay pending arbitration. The Ninth Circuit concluded that the two types of appeals could be distinguished because a vacatur does not deny the parties a chosen forum (there already has been an arbitration). Once a final judgment is entered in the district court, an appellate court will have before it an arbitration award that it can order enforced if the district court has interfered improperly with the right to arbitration. In an appeal from a vacatur, then, there is not the same element of irreparable harm that exists when arbitration is denied ab initio, or when an injunction is denied. Sentry, 759 F.2d at 697-98.

Nelson observes, however, that a vacatur presents circumstances very similar to those in which the collateral order rule of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), is applied. The Cohen rule permits interlocutory appeal of an order under 28 U.S.C. Sec. 1291 (1982) if the appealed order conclusively determines the question in the trial court, resolves an important question independent of the subject matter of the litigation, is effectively unreviewable on appeal from a final judgment or so important that review should not wait upon final judgment, and presents a serious and unsettled question on appeal. Bever v. Gilbertson, 724 F.2d 1083, 1085 (4th Cir.1984).

An order vacating an arbitration award rendered in a forum for which the parties contracted satisfies the first two requirements of our Bever statement of the Cohen rule, in that the order conclusively determines an important collateral question. Nelson's appeal also presents serious and unsettled questions regarding the scope of inquiry into evident partiality in an arbitration, and of whether the three-month limitation for motions to vacate arbitration awards should be strictly applied. Our jurisdictional inquiry thus devolves to whether a vacatur is effectively unreviewable after final judgment. "[T]he...