Metropolitan Life v. Lockette , 155 F.3d 1339 ( 1998 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
No. 97-7005 ELEVENTH CIRCUIT
Non-Argument Calendar 09/24/98
THOMAS K. KAHN
CLERK
D. C. Docket No. 97-0967-AH-M
METROPOLITAN LIFE,
Plaintiff-Appellant,
versus
BRUCE E. LOCKETTE,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Alabama
(September 24, 1998)
Before TJOFLAT, BLACK and HULL, Circuit Judges.
PER CURIAM:
I.
The litigation in this case began on April 16, 1997, when respondent, a former employee
of petitioner, brought suit in the Mobile County, Alabama, Circuit Court against petitioner and
three present or former employees of petitioner. The complaint in that case contains six causes
of action, all arising out of respondent’s employment with petitioner.
Respondent brought this state court action in violation of a binding arbitration agreement
that he made with petitioner. That agreement requires that he submit to arbitration any dispute
arising out of his employment with petitioner. In an effort to compel respondent to arbitrate the
claims asserted in his state court suit, petitioner filed a petition to compel arbitration in the
Mobile Division of the United States District Court for the Southern District of Alabama. The
petition invoked the district court’s authority to compel arbitration pursuant to Section 4 of the
Federal Arbitration Act (“FAA”), 9 U.S.C. § 4.1On November 4, 1997, before any responsive pleading had been filed by respondent, the
district court decided to abstain from the exercise of jurisdiction “in favor of the state court’s
sole exercise of jurisdiction,” and, acting sua sponte, issued an order dismissing the petition.
After the district court denied petitioner’s motion to alter judgment, petitioner lodged this
appeal.2
1
The petition alleged that the district court had subject matter jurisdiction under 28
U.S.C. § 1332, because of the diversity of citizenship existing between petitioner and
respondent.
2
Petitioner submits that we should employ the de novo standard of review in deciding
this case. The standard for reviewing a district court’s exercise of Colorado River abstention,
however, see Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 96 S.Ct.
2
We reverse.
II.
Abstention from the exercise of federal jurisdiction is the
exception, not the rule. ‘The doctrine of abstention, under which a
District Court may decline to exercise or postpone the exercise of
its jurisdiction, is an extraordinary and narrow exception to the
duty of a District Court to adjudicate a controversy properly before
it. Abdication of the obligation to decide cases can be justified
under this doctrine only in the exceptional circumstances where
the order to the parties to repair to the state court would clearly
serve an important countervailing interest.’
Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 96 S.Ct. 1236,
1244, 47 L.Ed.2d 483 (1976), quoting County of Allegheny v. Frank Mashuda Co., 360 U.S.
185, 188-89, 79 S.Ct. 1060, 1062-63, 3 L.Ed.2d 1163 (1959).
‘In assessing the appropriateness of dismissal [pursuant to the
abstention doctrine] in the event of an exercise of concurrent
jurisdiction, a federal court may . . . consider such factors as the
inconvenience of the federal forum; the desirability of avoiding
piecemeal litigation; and the order in which jurisdiction was
obtained by the concurrent forums. No one factor is necessarily
determinative; a carefully considered judgment taking into
account both the obligation to exercise jurisdiction and the
combination of factors counselling against that exercise is
required. Only the clearest of justifications will warrant
dismissal.’
Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 15-16, 103 S.Ct.
927, 937, 74 L.Ed.2d 765 (1983), quoting Colorado River, 424 U.S. at 818-819, 96 S.Ct. at
1246-47 (citations omitted). In our view, the district court, in balancing these factors, failed to
1236, 47 L.Ed.2d 483 (1976), is abuse of discretion. See Transouth Fin. Corp v. Bell, 149 F.3d
1292, 1294 (11th Cir. 1998); First Franklin Fin. Corp. v. McCollum, 144 F.3d 1362, 1363 (11th
Cir. 1998). We note that our decision in this case would be the same under either standard.
3
give proper weight to its “obligation to exercise jurisdiction.” In particular, the court apparently
overlooked the fact that Moses Cone is on all fours with the case at hand and, thus, controlled its
decision.3
Moses Cone involved a dispute arising out of the performance of a construction contract.
The litigation began, as here, in state court, when the owner, a hospital, sued its contractor and
its architect. The contract between the hospital and the contractor contained an arbitration clause
that bound those parties to arbitrate the dispute. The architect, however, was not a party to that
agreement; thus, he was amenable to suit by the hospital.
Like the petitioner did in the instant case, the contractor filed a petition in federal district
court under Section 4 of the FAA to compel arbitration.4 The hospital moved the court to
abstain from exercising its jurisdiction because, as here, the issue whether the controversy was
arbitrable was also before the state court. The district court granted the motion, and the
contractor appealed.
The court of appeals, sitting en banc, reversed the district court’s ruling and remanded the
case with the instruction that the district court order arbitration. Mercury Construction
Corporation v. Moses H. Cone Memorial Hospital, 656 F.2d 933, rehearing denied, 664 F.2d 936(4th Cir. 1981). On certiorari, the Supreme Court affirmed. Addressing what appears to have
3
Moreover, we have twice recently had cause to address this very issue. See Transouth
Fin. Corp., 149 F.3d at 1293 (finding that district court abused its discretion by refusing to
exercise jurisdiction over action brought to compel arbitration); First Franklin Fin. Corp., 144
F.3d at 1365 (“In short, this case is so close to [Moses Cone] . . . that the district court abused its
discretion in abstaining.”).
4
The contractor predicated the district court’s subject matter jurisdiction on diversity of
citizenship, 28 U.S.C. § 1332.
4
been the main reason why the district court in the instant case abstained – the avoidance of the
piecemeal litigation that would result if respondent’s claims against the individual defendants
were resolved in state court while his claims against petitioner were resolved in federal court (if
arbitration were ordered) -- the Supreme Court said this:
The Hospital points out that it has two substantive disputes here –
one with Mercury, concerning Mercury’s claim for delay and
impact costs, and the other with the Architect, concerning the
Hospital’s claim for indemnity for any liability it may have to
Mercury. The latter dispute cannot be sent to arbitration without
the Architect’s consent, since there is no arbitration agreement
between the Hospital and the Architect. It is true, therefore, that if
Mercury obtains an arbitration order for its dispute, the Hospital
will be forced to resolve these related disputes in different forums.
That misfortune, however, is not the result of any choice between
the federal and state courts; it occurs because the relevant federal
law requires piecemeal resolution when necessary to give effect to
an arbitration agreement. Under the [FAA], an arbitration
agreement must be enforced notwithstanding the presence of other
persons who are parties to the underlying dispute but not to the
arbitration agreement. If the dispute between Mercury and the
Hospital is arbitrable under the Act, then the Hospital’s two
disputes will be resolved separately – one in arbitration, and the
other (if at all) in state-court litigation. Conversely, if the dispute
between Mercury and the Hospital is not arbitrable, then both
disputes will be resolved in state court. But neither of those two
outcomes depends at all on which court decides the question of
arbitrability. Hence, a decision to allow that issue to be decided in
federal rather than state court does not cause piecemeal resolution
of the parties’ underlying disputes. Although the Hospital will
have to litigate the arbitrability issue in federal rather than state
court, that dispute is easily severable from the merits of the
underlying disputes.
Moses Cone, 460 U.S. at 19-20, 103 S.Ct. at 939. Here, respondent’s claims against the
individual defendants in the state court suit are “easily severable from the merits of”
respondent’s dispute with petitioner. Moreover, as the petition to compel arbitration asserts, “the
5
remaining defendants in the underlying Circuit Court action . . . are not indispensable parties to
the determination of arbitrability by this Court.”
III.
In conclusion, we REVERSE the district court’s order dismissing petitioner’s petition to
compel arbitration, and instruct the district court, on receipt of our mandate, to grant the relief
the petition seeks.
SO ORDERED.
6