Wednesday, May 09, 2007

Eighth Circuit Holds Order Staying Proceedings Until the Resolution of Foreign Litigation is Not Immediately Appealable Under Colorado River Doctrine

Per Kreditverein der Bank Austria Creditanstalt fur Niederosterreich und Bergenland v. Nejezchleba, 477 F.3d 942 (8th Cir. Mar. 01, 2007):

As a preliminary matter, we must decide whether the district court stayed the proceedings pursuant to the court's inherent powers or abstained under Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), and Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Compare Landis v. N. Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 L.Ed. 153 (1936) (reasoning “the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants”), with Mountain Pure, LLC v. Turner Holdings, LLC, 439 F.3d 920, 926-27 (8th Cir.2006) (discussing the propriety of abstention pursuant to Colorado River and Moses H. Cone ). The line dividing a stay pending resolution of an issue by another court and abstention under Colorado River and Moses H. Cone is not clear. See 15A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3914.13 (2d ed.1992). The distinction is important because a stay pursuant to the court's inherent powers is typically an order that is not immediately appealable under § 1291. See Moses H. Cone, 460 U.S. at 10 n. 11, 103 S.Ct. 927; Boushel v. Toro Co., 985 F.2d 406, 408 (8th Cir.1993). In contrast, abstention under Colorado River and Moses H. Cone is usually an immediately appealable order. See Wolfson v. Mut. Benefit Life Ins. Co., 51 F.3d 141, 144 (8th Cir.1995), abrogated on other grounds by Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996), as recognized in In re Otter Tail Power Co., 116 F.3d 1207, 1215 n. 7 (8th Cir.1997).

Here, the district court ordered the proceedings stayed pending the determination of damages by the Austrian courts. The district court neither cited nor conducted an analysis under Colorado River or Moses H. Cone. Neither of these facts is controlling though because finality is determined by looking at the substance of what the district court intended. See Lunde v. Helms, 898 F.2d 1343, 1345 (8th Cir.1990) (per curiam).

The only time that an order granting a stay will be considered a final order is if [the stay] is tantamount to a dismissal and [the stay] effectively ends the litigation.” Boushel, 985 F.2d at 408 (citing Moses H. Cone, 460 U.S. at 10, 103 S.Ct. 927); Lunde, 898 F.2d at 1345 (“ ‘When a stay amounts to a dismissal of the underlying suit, however, an appellate court may review it.’ ” (quoting Cheyney State Coll. Faculty v. Hufstedler, 703 F.2d 732, 735 (3d Cir.1983))). Specifically, a stay is immediately appealable if the district court proceedings were stayed to allow pending parallel proceedings, which involve the same parties litigating the same claims and issues, to adjudicate the claims and issues, and the judgment of the parallel proceedings will be given res judicata effect. See In re Kozeny, 236 F.3d 615, 618 (10th Cir.2000) (per curiam) (addressing an appeal of a stay pending international proceedings); Michelson v. Citicorp Nat'l Servs., Inc., 138 F.3d 508, 515 (3d Cir.1998); see also Moses H. Cone, 460 U.S. at 10 n. 11, 103 S.Ct. 927 (stating a stay is immediately appealable if “the object of the stay is to require all or an essential part of the federal suit to be litigated in [another] forum” or “when the sole purpose and effect of the stay are precisely to surrender jurisdiction of a federal suit to [another] court”).Here, the outcome of the Austrian litigation will affect only a small portion of the district court proceedings. Cf. Michelson, 138 F.3d at 516. Although the parties have been and will continue to litigate in Austria, the claims and issues litigated in Austrian courts are not all or essentially all of the claims and issues to be adjudicated in the district court proceedings. . . . The district court's stay order is not immediately appealable under Colorado River and Moses H. Cone.


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