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Writing in this column on June 28, my colleague Aaron Bayer addressed the subject of appeals from arbitration awards under the Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq. However, important appellate issues often emerge before that stage in the arbitral process. A number of issues arise from the concept of “arbitrability”-that is, whether the parties’ dispute is to be resolved through a judicial proceeding or arbitration. Courts have grappled with questions regarding appellate review in such recurring situations as orders directing arbitration and dismissing or staying the lawsuit and, conversely, orders that deny arbitration and seek to proceed with the litigation. Appeals of final and interlocutory decisions Section 16 of the FAA prescribes the general rules governing appeal from arbitration-related orders of a district court. First, it provides for appeal from “a final decision with respect to an arbitration that is subject to [the FAA].” Second, it allows appeal from interlocutory orders that grant, continue or modify an injunction against an arbitration. Third, in a notable departure from the usual “final judgment” rule of appellate jurisdiction, it authorizes appeal from interlocutory orders that are adverse to arbitration but, significantly, not orders that are favorable to arbitration. For example, an interlocutory order declining to compel arbitration or to stay judicial proceedings pending arbitration is immediately appealable; an interlocutory order compelling arbitration or granting a stay pending arbitration is not appealable, and review must await the ultimate arbitral decision. This dichotomy reflects the animating pro-arbitration policy of the FAA: Interlocutory orders that are hostile to arbitration, and only those interlocutory orders, are subject to immediate appeal. In Green Tree Fin. Corp. v. Randolph, 531 U.S. 79 (2000), the Supreme Court construed � 16′s authorization of appeal from a district court’s “final decision” in an arbitration case. Rejecting the majority view among the circuits, the court held that this term in the FAA has the same meaning as the identical phrase in 28 U.S.C. 1291 that underlies the “final judgment” rule familiar to appellate litigators. Accordingly, the district court’s order in Green Tree directing the parties to arbitrate and dismissing the judicial proceeding was immediately appealable. In a footnote freighted with significance, the court observed that an order staying the case pending arbitration rather than dismissing it would not have been a “final decision” subject to immediate appeal. It raised but did not answer the question whether the district court should have entered a stay instead of a dismissal. Id. at 87 n.2. That question-whether a district court, after ordering arbitration, should stay or dismiss the lawsuit-is a critical “gateway” because it determines the right to an immediate appeal. It also has produced a conflict in the circuits. Section 3 of the FAA provides that a district court, in referring a matter to arbitration, “shall on application of one of the parties stay the trial of the action.” Some courts have read this language to require a stay pending arbitration and thus to preclude dismissal of the action. These courts also have reasoned that the requirement of a stay furthers the statutory pro-arbitration policy by permitting the arbitration process to proceed unencumbered by an immediate appeal. Finally, no other statute vests the appellate gatekeeper function solely in the discretion of the district court, suggesting that it is unlikely that Congress intended to do so here. See Lloyd v. Hovensa LLC, 369 F.3d 263 (3d Cir. 2004); Adair Bus. Sales Inc. v. Blue Bird Corp., 25 F.3d 953 (10th Cir. 1994). By contrast, other courts have left the choice of a stay or dismissal to the discretion of the district court. They conclude that the FAA does not divest district courts of their customary authority to provide appropriate relief and to manage their dockets. Moreover, these courts do not believe that Congress intended to defer appellate review in all cases until completion of the contested arbitration. And a requirement of a stay would mean that there would be no final decisions of district courts subject to immediate appellate review, thereby rendering this part of � 16 largely ineffective in such cases. See ATAC Corp. v. Arthur Treacher’s Inc., 280 F.3d 1091 (6th Cir. 2002); Choice Hotels Int’l Inc. v. BSR Tropicana Resort Inc., 252 F.3d 707 (4th Cir. 2001); Green v. Ameritech Corp., 200 F.3d 967 (6th Cir. 2000); Fedmet Corp. v. M/V Buyalak, 194 F.3d 674 (5th Cir. 1999); Bercovitch v. Baldwin School Inc., 133 F.2d 141 (1st Cir. 1998); Alford v. Dean Witter Reynolds Inc., 975 F.2d 1161 (5th Cir. 1992); Sparling v. Hoffman Constr. Co. Inc., 864 F.2d 635, 638 (9th Cir. 1988); Genesco Inc. v. T. Kakivchi & Co. Ltd., 815 F.2d 840 (2d Cir. 1987). Under this line of authority, a final decision exists regardless of whether the dismissal is with or without prejudice. See Salim Oleochemicals v. M/V Shropshire, 278 F.3d 90 (2d Cir. 2002). In Apache Bohai Corp. v. Texaco China B.V., 330 F.3d 307 (2003), the 5th U.S. Circuit Court of Appeals dismissed an appeal for lack of appellate jurisdiction because the district court’s order compelling arbitration and staying judicial proceedings was not an appealable “final decision.” The Supreme Court denied a petition for certiorari that presented the question of the proper scope of the district court’s authority to stay rather than dismiss the case. See 124 S. Ct. 311 (2003). In circuits where district courts retain discretion to stay or dismiss, appellate courts have sought to provide guidance for the exercise of that discretion. The 6th Circuit has instructed district courts that dismissal (and hence immediate appealability) should reflect whether “there is a genuine legal question concerning arbitrability” and that a stay can “speed along” arbitration “in the vast majority of cases” where there is “little legal dispute.” ATAC, 280 F.3d at 1101. And the 2d Circuit has stated that district courts should be mindful of the “pro-arbitration tilt of the statute” and avoid “unnecessary delay in the arbitral process through [immediate] appellate review.” Salim Oleochemicals, 278 F.3d at 93. An entirely distinct issue regarding stays also has emerged and created a conflict among the courts. It arises when a district court has denied a motion to compel arbitration, which, as an anti-arbitration order, is immediately appealable under � 16(a)(1). The question is whether the district court is required to stay further proceedings pending appeal or whether it has discretion to proceed notwithstanding the appeal. The 11th Circuit recently held that a district court must, upon a party’s motion, grant a stay unless the appeal is frivolous. See Blinco v. Green Tree Servicing LLC, 366 F.2d 1249 (2004). The 7th Circuit is in accord. See Bradford-Scott Data Corp. Inc. v. Physician Computer Network Inc. 128 F.3d 504 (1997). However, the 11th Circuit in Blinco noted that the 2d and 9th circuits had indicated a different view. See In re Salomon Inc. Shareholders Derivative Litig., 68 F.3d 554 (2d Cir. 1995); Britton v. Co-op Banking Group, 916 F.3d 1405 (9th Cir. 1995). Litigators should consider other avenues of review In addition to appellate rights under the FAA, litigators should consider other possible avenues of review such as certification pursuant to 28 U.S.C. 1292(b), the collateral-order doctrine, pendent jurisdiction and mandamus. Section 16 of the FAA expressly preserves � 1292(b) certification, and courts have recognized that this procedure remains available. See Salim Oleochemicals, 278 F.3d at 91. On the other hand, � 16 explicitly forecloses non-FAA bases for appeal except for � 1292 (b) certification, and courts have held that many of the usual theories of appellate jurisdiction, such as the collateral-order doctrine, are unavailable here. See ATAC, 280 F.3d at 1101-02; Salim Oleochemicals, 278 F.3d at 91 n.1. With respect to the doctrine of pendent appellate jurisdiction, the courts are divided, with the majority holding that pendent jurisdiction is permissible in appropriate circumstances. See National Railroad Passenger Corp. v. Expresstrak LLC, 330 F.3d 523 (D.C. Cir. 2003); Manion v. Nagin, 255 F.3d 535 (8th Cir. 2001); Quackenbush v. Allstate Ins. Co., 121 F.3d 1372 (9th Cir. 1997); Freeman v. Complex Computing Co., 119 F.3d 1044 (2d Cir. 1997); but see IDS Life Ins. Co. v. SunAmerica Inc., 103 F.3d 524 (7th Cir. 1996) (FAA precludes pendent jurisdiction). Finally, the 5th Circuit at least assumes that mandamus is available but requires that a “particularly heavy . . . burden” be satisfied to justify issuance of the writ. Apache Bohai, 330 F.3d at 310. One concluding word of caution to avoid a trap for the unwary: Some courts have held that the failure to take an interlocutory appeal on an issue as authorized under the FAA can, if prejudice results to the other party, constitute a waiver of the right to seek later appellate review of that issue. See Cargill Ferrous Int’l v. SEA Phoenix MV, 325 F.3d 695 (5th Cir. 2003); John Morrell & Co. v. United Food & Commercial Workers Int’l Union, 37 F.3d 1302 (8th Cir. 1994); Cotton v. Slone, 4 F.3d 176 (2d Cir. 1993); see also Colon v. R.K. Grace & Co., 358 F.3d 1, 4 (1st Cir. 2003) (court is “sympathetic” to that approach but declines to “employ a mechanical forfeiture rule”). An earlier decision of the 4th Circuit, however, disagrees. Clark v. Merrill Lynch, Pierce, Fenner & Smith Inc., 924 F.2d 550 (4th Cir. 1991). Counsel therefore must be careful in deciding whether to pursue an immediate interlocutory appeal that it not waive any subsequent appellate rights. Mark I. Levy is the director of the appellate advocacy group at Atlanta-based Kilpatrick Stockton and is the resident in the firm’s Washington office. He is a fellow of the American Academy of Appellate Lawyers and a member of the Advisory Committee on the Federal Rules of Appellate Procedure.

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