, --- F.3d ----, 2011 WL 5142183
Whether an appeal from a denial of a
motion to compel arbitration divests the district court of jurisdiction
to proceed to the merits is the subject of a circuit split. The Second
and Ninth Circuits have held that a stay is not automatic.
the court pointed out that normally, appellate review of
a collateral order does not deprive the district court of jurisdiction
to proceed to the merits. The court cited the determination in
Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 21, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)
that because arbitrability is an issue easily separable from the merits
of the underlying dispute, the district court could address the merits
while the appellate court reviewed arbitrability. Additionally, the
court noted that an automatic stay would allow litigants
to delay resolution of the matter by filing frivolous appeals. In the
absence of an automatic stay, the district court nonetheless retains the
power to determine, on a case-by-case basis, whether proceedings should
be stayed until the appeal regarding arbitrability has been resolved.
The Seventh Circuit, later joined by the Third, Fourth, Tenth, and Eleventh,
has held that a notice of appeal automatically stays proceedings in the district court. The Seventh Circuit reasoned in
Bradford–Scott Data Corp. v. Physician Computer Network, 128 F.3d 504 (7th Cir.1997)
that the underlying claims before the district court are not collateral
to the issue presented by an appeal, because the appeal is to determine
whether the matter should be litigated in the district court at all.
The court was worried about inconsistent handling of the case by the two
courts and was concerned that allowing simultaneous proceedings would
defeat the speed and cost benefits parties seek from arbitration.
Id. at 505.
These courts analogize arbitrability appeals to appeals regarding double jeopardy, sovereign immunity, and qualified immunity,
id. at 506,
reasoning that because a district court cannot
proceed past these issues when there are interlocutory appeals, it
similarly cannot proceed when arbitrability is appealed.
The legal debate turns on
Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 103 S.Ct. 400, 74 L.Ed.2d 225 (1982)
Although appeals transfer jurisdiction from the district court to the
appellate court concerning “those aspects of the case involved in the
id. at 58,
the district court is nonetheless free to adjudicate matters that are not involved in that appeal,
Alice L. v. Dusek,
492 F.3d 562 (5th Cir.2007). At issue here is
whether the merits of an arbitration claim are an aspect of a denial of
an order to compel arbitration.
The Ninth Circuit interpreted
narrowly, holding that because answering the question of
arbitrability does not determine the merits of the case, the merits are
not an aspect of the case that is involved in the appeal on
arbitrability. To the contrary, the Seventh Circuit interpreted
broadly, holding that because an appeal on arbitrability
concerns whether the case will be heard in the district court at all,
the merits in district court are an aspect of the case that is involved
in the appeal.
narrower interpretation better comports with our precedents and the
nature of arbitration. “How broadly a court defines the aspects of the
case on appeal depends on the nature of the appeal.”
Alice L. v. Dusek, 492 F.3d 563, 565 (5th Cir.2007)
(per curiam). The facts of
suggest a narrow interpretation is normally appropriate.