Brown & Root Inc v. Breckenridge ( 2000 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BROWN & ROOT, INCORPORATED,
Plaintiff-Appellant,
v.
No. 99-1831
WARREN J. BRECKENRIDGE; CHARLES
LEE BOOKER,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Charles H. Haden II, Chief District Judge.
(CA-99-254-2)
Argued: March 2, 2000
Decided: May 2, 2000
Before WILKINSON, Chief Judge, and WILLIAMS
and MICHAEL, Circuit Judges.
_________________________________________________________________
Affirmed by published opinion. Chief Judge Wilkinson wrote the
opinion, in which Judge Williams and Judge Michael joined.
_________________________________________________________________
COUNSEL
ARGUED: W. Carl Jordan, VINSON & ELKINS, L.L.P., Houston,
Texas, for Appellant. Leslie Renee Stotler, RANSON LAW
OFFICES, Charleston, West Virginia, for Appellees. ON BRIEF:
Susanne K. Sullivan, VINSON & ELKINS, L.L.P., Houston, Texas;
Bryan R. Cokeley, STEPTOE & JOHNSON, Charleston, West Vir-
ginia, for Appellant. J. Michael Ranson, Cynthia M. Salmons, RAN-
SON LAW OFFICES, Charleston, West Virginia, for Appellees.
_________________________________________________________________
OPINION
WILKINSON, Chief Judge:
Appellant Brown & Root filed a motion in state court to compel
arbitration of appellees' employment discrimination claims. The state
court denied this motion. Brown & Root sought appellate review of
this decision first in the West Virginia Supreme Court of Appeals and
then in the United States Supreme Court. The state supreme court
declined to issue a writ of prohibition. Brown & Root then petitioned
a federal district court to compel arbitration. While this petition was
pending, the United States Supreme Court denied certiorari to review
the state court decision. The district court dismissed the petition for
lack of subject matter jurisdiction under the Rooker-Feldman doc-
trine. Because Brown & Root was in essence seeking appellate review
of a state court decision by a federal district court in violation of
Rooker-Feldman, we affirm the judgment of the district court.
I.
Appellant Brown & Root employed appellees Warren Brecken-
ridge and Charles Lee Booker as construction and maintenance work-
ers. Upon commencing work with Brown & Root, Breckenridge and
Booker each signed an employment contract. Each contract contained
an arbitration clause covering employment disputes. Brown & Root
terminated both men in October 1996.
In September 1997, Breckenridge and Booker filed an employment
discrimination suit against Brown & Root and two supervisors in the
Circuit Court of Kanawha County, West Virginia. Breckenridge and
Booker alleged that they were terminated because of their race in vio-
lation of the West Virginia Human Rights Act (WVHRA), W. Va.
Code § 5-11-1 to -20 (1999). In December 1997, Brown & Root filed
a motion in the state trial court to compel Breckenridge and Booker
to arbitrate their claims as required by their employment contracts.
2
In September 1998, the state court heard argument on Brown &
Root's motion. The proceedings focused primarily on the question of
whether the Federal Arbitration Act (FAA), 9 U.S.C.§ 1 et seq.
(1994), governed the instant dispute. Brown & Root argued that the
FAA required appellees to submit their claims to arbitration pursuant
to their employment agreements. The state court denied the motion,
holding that "an employee['s] right to a trial by jury under the West
Virginia Human Rights Act cannot be waived or contracted away,
even though as a condition of employment an agreement to arbitrate
exists between the parties."
Brown & Root then petitioned the West Virginia Supreme Court
of Appeals for a writ of prohibition. Specifically, Brown & Root
asked the state supreme court to vacate the trial court's ruling and to
bar any further proceedings until the parties could complete arbitra-
tion. Brown & Root states that it sought this writ because West Vir-
ginia does not provide a statutory right of appeal from an
interlocutory order denying a motion to compel arbitration. See W.
Va. Code § 58-5-1 (Supp. 1999) (only final judgments of circuit
courts are appealable to state supreme court); James M.B. v. Carolyn
M., 456 S.E.2d 16, 19 (W. Va. 1995) ("[A] case is final only when
it terminates the litigation between the parties on the merits of the
case, and leaves nothing to be done but to enforce by execution what
has been determined." (internal quotation marks omitted)). The West
Virginia Supreme Court has stated that it will issue a writ of prohibi-
tion "to correct only substantial, clear-cut, legal errors plainly in con-
travention of a clear statutory, constitutional, or common law mandate
which may be resolved independently of any disputed facts and only
in cases where there is a high probability that the trial will be com-
pletely reversed if the error is not corrected in advance." State ex rel.
Charleston Mail Ass'n v. Ranson, 488 S.E.2d 5, 9 (W. Va. 1997)
(internal quotation marks omitted). Brown & Root argued in its peti-
tion that the state trial court erred in finding that the FAA does not
apply to appellees' WVHRA claims. In December 1998, the petition
was denied.
Brown & Root then petitioned the United States Supreme Court for
a writ of certiorari pursuant to 28 U.S.C. § 1257(a) (1994). Brown &
Root asserted that the state trial court's decision constituted a final
judgment or decree for the purpose of certiorari jurisdiction under
3
Southland Corp. v. Keating, 465 U.S. 1, 6-7 (1984). Just as in its peti-
tion to the state supreme court, Brown & Root argued that the state
trial court erred in finding that the FAA does not apply to appellees'
WVHRA claims. The petition for certiorari was denied on May 17,
1999.
In March 1999, while its petition for certiorari was pending, Brown
& Root filed suit against Breckenridge and Booker in the United
States District Court for the Southern District of West Virginia.
Brown & Root filed this federal action in an effort to bring the state
judicial proceedings to a halt and direct the matter to arbitration.
Brown & Root then petitioned the district court to compel arbitration
of appellees' employment discrimination claims pursuant to § 4 of the
FAA.
Appellees filed a motion to dismiss Brown & Root's complaint. On
May 21, 1999, the district court granted the motion on the ground that
the court lacked subject matter jurisdiction under the Rooker-Feldman
doctrine. See Brown & Root, Inc. v. Breckenridge , 187 F.R.D. 259(S.D.W. Va. 1999). The district court found that Brown & Root was
essentially asking it to overturn the state court order denying arbitra-
tion. The district court stated that Rooker-Feldman prohibited it from
exercising what would amount to appellate jurisdiction over a state
court decision. Brown & Root now appeals.
II.
The Rooker-Feldman doctrine provides that"a United States Dis-
trict Court has no authority to review final judgments of a state court
in judicial proceedings." District of Columbia Court of Appeals v.
Feldman, 460 U.S. 462, 482 (1983); see also Rooker v. Fidelity Trust
Co., 263 U.S. 413 (1923). "[J]urisdiction to review such decisions lies
exclusively with superior state courts and, ultimately, the United
States Supreme Court." Plyler v. Moore, 129 F.3d 728, 731 (4th Cir.
1997). Only habeas corpus petitions or actions sounding in habeas
corpus are excepted from the Rooker-Feldman bar. See Plyler, 129
F.3d at 732, 733.
Rooker-Feldman bars not only direct review of issues actually
decided by the state court, but also consideration of those claims
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which are "inextricably intertwined" with state court decisions. See
Feldman, 460 U.S. at 486-87; Plyler, 129 F.3d at 731. The "inextrica-
bly intertwined" prong of the doctrine bars a claim that was not actu-
ally decided by the state court but where "success on the federal claim
depends upon a determination that the state court wrongly decided the
issues before it." Plyler, 129 F.3d at 731 (internal quotation marks
omitted). Under either the "actually decided" or the "inextricably
intertwined" prong, the principle is the same:"[A] party losing in
state court is barred from seeking what in substance would be appel-
late review of the state judgment in a United States district court,
based on the losing party's claim that the state judgment itself violates
the loser's federal rights." Johnson v. De Grandy, 512 U.S. 997,
1005-06 (1994).
Rooker-Feldman is one of a number of doctrines that safeguards
our dual system of government from federal judicial erosion. Cf.
Atlantic Coast Line R.R. v. Brotherhood of Locomotive Eng'rs, 398
U.S. 281, 286 (1970) ("[F]rom the beginning we have had in this
country two essentially separate legal systems. Each system proceeds
independently of the other with ultimate review in[the Supreme]
Court of the federal questions raised in either system."). The indepen-
dence of state courts would surely be compromised if every adverse
decision in state court merely rang the opening bell for federal litiga-
tion of the same issues.
Even more fundamentally, the Rooker-Feldman doctrine is rooted
in the principle of separation of powers. It rests on two basic proposi-
tions of federal jurisdiction. First, Congress has vested the authority
to review state court judgments in the United States Supreme Court
alone. See 28 U.S.C. § 1257(a); Feldman, 460 U.S. at 482. The
Rooker-Feldman doctrine thus "interprets 28 U.S.C. § 1257 as ordi-
narily barring direct review in the lower federal courts of a decision
reached by the highest state court, for such authority is vested solely
in [the Supreme] Court." Asarco Inc. v. Kadish, 490 U.S. 605, 622
(1989). Second, Congress has empowered the federal district courts
to exercise only original jurisdiction. See, e.g., 28 U.S.C. § 1331,
1332; Rooker, 263 U.S. at 416. "While the lower federal courts were
given certain powers in the [Judiciary Act of 1789], they were not
given any power to review directly cases from state courts, and they
have not been given such powers since that time." Atlantic Coast
5
Line, 398 U.S. at 286. And it is well settled that "Congress has the
constitutional authority to define the jurisdiction of the lower federal
courts." Keene Corp. v. United States, 508 U.S. 200, 207 (1993).
Importantly, "the Rooker-Feldman doctrine precludes not only
review of adjudications of the state's highest court, but also the deci-
sions of its lower courts." Jordahl v. Democratic Party of Virginia,
122 F.3d 192, 199 (4th Cir. 1997); accord FOCUS v. Allegheny
County Court of Common Pleas, 75 F.3d 834, 840 (3d Cir. 1996)
("We have interpreted the doctrine to encompass final decisions of
lower state courts."). "The Rooker-Feldman doctrine is in no way
dependent upon the temporal procedural posture of the state court
judgment." Jordahl, 122 F.3d at 202."[R]ather, the doctrine rein-
forces the important principle that review of state court decisions
must be made to the state appellate courts, and eventually to the
Supreme Court, not by federal district courts or courts of appeal." Id.Finally, Rooker-Feldman also applies to interlocutory orders issued
by state courts. Indeed, "[i]t cannot be the meaning of Rooker-
Feldman that, while the inferior federal courts are barred from
reviewing final decisions of state courts, they are free to review inter-
locutory orders." Doctor's Assocs., Inc. v. Distajo, 107 F.3d 126, 138
(2d Cir. 1997) (internal quotation marks omitted); see also
Charchenko v. City of Stillwater, 47 F.3d 981, 983 n.1 (8th Cir. 1995)
(noting that "Rooker-Feldman is broader than claim and issue preclu-
sion because it does not depend on a final judgment on the merits").
III.
Brown & Root argues that Rooker-Feldman does not bar the instant
action because consideration of its federal petition would not require
the federal district court to engage in direct review of the state court
order. The state court decision was allegedly based entirely on its con-
struction of the WVHRA and did not address the preemptive effect
of the FAA on state law. Brown & Root's federal petition to compel
arbitration, on the other hand, is based entirely on§ 4 of the FAA.
Brown & Root contends that it thus asserts an unresolved and inde-
pendent federal claim based on the FAA and its preemptive effect on
state law.
6
We disagree. What Brown & Root seeks now is nothing more than
appellate review of the state court ruling in the lower federal courts.
Brown & Root requests the exact same relief that the state trial court
refused to grant. Brown & Root also relies on the same legal grounds
for relief in both its state and federal motions-- namely, the preemp-
tive effect of the FAA on appellees' state law claims. The state court
heard extensive argument on this issue and specifically addressed the
applicability of the FAA in the proceedings before it.
A brief review of the state court proceedings demonstrates that
Brown & Root raised and the state court actually decided the question
of the FAA's application to this case. See Plyler, 129 F.3d at 732("[R]eview of the proceedings in state court is necessary" to deter-
mine whether an issue was actually decided.). Early in the hearing on
its motion to compel arbitration, Brown & Root argued:
The outcome of this motion, Your Honor, we believe, turns
on the question of whether federal arbitration law or state
arbitration law governs the arbitration agreement entered
into between the two plaintiffs and Brown & Root. Federal
arbitration law, of course, is embodied in the Federal Arbi-
tration Act, and we take the position that that statute con-
trols this dispute rather than state law. The Federal
Arbitration Act does apply.
Counsel then discussed federal and state case law relevant to the
question of whether the FAA applies to a given claim. Brown & Root
relied chiefly on Southland Corp. v. Keating, 465 U.S. 1 (1984), and
Perry v. Thomas, 482 U.S. 483 (1987), arguing that those cases were
analogous situations where the Supreme Court held that the FAA pre-
empted a state statute with respect to a particular claim. Brown &
Root also relied on Rashid v. Schenck Constr. Co., 438 S.E.2d 543(W. Va. 1993), where the state supreme court addressed the FAA's
application to an arbitration agreement. The relief which Brown &
Root requested was "to have this case dismissed, or in the alternative,
stayed and that an order be [entered] compelling the plaintiffs to sub-
mit their discrimination claims to arbitration."
During Brown & Root's reply argument, the following colloquy
took place between the court and Brown & Root:
7
THE COURT: What is your strongest position that the
Federal Act preempts this? What is the strongest position
that you have on that?
BROWN & ROOT: That is the salient issue, Your Honor.
THE COURT: Why does that apply? Why does the Fed-
eral Act apply here? What is your strongest argument?
Brown & Root went on to argue that Southland and Perry controlled,
while the court suggested that those cases were distinguishable. The
court then said it was going to deny the motion, stating that parties
to an employment agreement could not contract out of the WVHRA.
The court also noted that if the FAA did indeed preempt the state
claims in this case, then the state supreme court could so hold. The
court's subsequent order denying the motion referenced these pro-
ceedings and concluded: "The Court determines that an employee['s]
right to a trial by jury under the West Virginia Human Rights Act
cannot be waived or contracted away, even though as a condition of
employment an agreement to arbitrate exists between the parties."
A comparison of Brown & Root's federal complaint with its posi-
tion in state court is also instructive:
Brown & Root is aggrieved by Defendants' refusal to honor
their agreements and submit their claims to arbitration, and
by the state courts' disregard of federal law, and is com-
pelled to initiate this action to obtain enforcement of the par-
ties' agreements to arbitrate pursuant to the FAA.
This complaint seeks precisely the same relief denied by the state trial
court. In fact, Brown & Root claims that the West Virginia state
courts have in part caused its present injury by refusing to grant the
relief sought. Further, Brown & Root's brief to the district court made
much the same argument that Brown & Root presented to the state
court -- an argument which the state court had already rejected.
In light of all of this, Brown & Root's contention that the state
court's ruling "was based solely on its interpretation of West Virginia
8
state law" and that the federal petition "presents an issue unresolved
by the state court" appears disingenuous. Indeed, it is difficult to iden-
tify any substantive difference between the issues decided by the state
trial court and those presented to the federal district court. Brown &
Root makes much of the fact that the state court's written order did
not specifically mention the FAA. But this resort to literalism flies in
the face of the ample record showing that the FAA issue was argued
before and decided by the state court. Even without the benefit of the
transcript of the state proceedings, this court would have little diffi-
culty finding that Brown & Root's federal claim is"inextricably inter-
twined" with the state court judgment. The instant litigation thus
"essentially amounts to nothing more than an attempt to seek review
of [the state court's] decision by a lower federal court." Plyler, 129
F.3d at 733. For when a party sues in federal district court to readjudi-
cate the same issues decided in the state court proceedings, that action
is in essence an attempt to obtain direct review of the state court deci-
sion in the lower federal courts in contravention of Rooker-Feldman.
See Asarco, 490 U.S. at 622-23.
Not only did the state trial court decide the FAA issue, but Brown
& Root also sought appellate review through the statutorily prescribed
channels of petitions to the state supreme court and United States
Supreme Court. Indeed, Brown & Root's petitions to these courts
belie its present argument that the state trial court did not decide the
applicability of the FAA. For example, in its petition to the state
supreme court for a writ of prohibition, Brown & Root contended:
Judge Kaufman's ruling . . . is clearly contrary to the FAA,
as interpreted by the United States Supreme Court and other
courts. Judge Kaufman's holding that agreements to arbi-
trate claims arising under the West Virginia Human Rights
Act are not enforceable under the FAA violates these funda-
mental constitutional principles and must be vacated. . . .
The respondent judge committed clear error by finding that
plaintiffs' claims under the Human Rights Act are not sub-
ject to the Federal Arbitration Act.
Similarly, in its petition to the United States Supreme Court for a
writ of certiorari, Brown & Root asserted:
9
[T]he sole basis for the trial court's decision was its view
that the right to trial by jury preserved in the West Virginia
Human Rights Act controlled over the FAA, notwithstand-
ing decisions of [the United States Supreme] Court to the
contrary. . . . [T]he trial court refused to follow these deci-
sions, concluding instead that Southland and Perry were dis-
tinguishable because they did not involve "human rights."
Brown & Root argues that the instant action should nonetheless be
allowed to proceed because it was deprived of a"meaningful opportu-
nity to obtain appellate review." This argument, however, misstates
the law. The relevant inquiry is whether a party had a "reasonable
opportunity to raise his federal claim in state proceedings." E.g., Long
v. Shorebank Devel. Corp., 182 F.3d 548, 558 (7th Cir. 1999) (inter-
nal quotation marks omitted); Wood v. Orange County, 715 F.2d
1543, 1547 (11th Cir. 1983). Rooker-Feldman ordinarily does not bar
a federal claim where such an opportunity was lacking, for "an issue
cannot be inextricably intertwined with a state court judgment if the
plaintiff did not have a reasonable opportunity to raise the issue in
state court proceedings." Long, 182 F.3d at 558. For example, in
Long, the plaintiff was allowed to present her federal claims in federal
court because those claims "could not have been presented before [the
state trial court]." Id. at 560. The Rooker-Feldman bar likewise did
not apply in Wood because the "plaintiffs did not have a reasonable
opportunity to raise their claims in the state trial court where judg-
ment was entered or on appeal of that judgment." 715 F.2d at 1548(emphasis added).
Here Brown & Root not only had a reasonable opportunity to raise
its federal claim in state court, but it in fact did so and obtained a state
court ruling on this claim. Brown & Root then sought a writ of prohi-
bition from the state supreme court. The West Virginia Supreme
Court of Appeals exercised its discretion against issuing a writ.
Whether this constituted a "meaningful opportunity to obtain appel-
late review" is not the question. Rather, all that matters is that Brown
& Root undeniably enjoyed a reasonable opportunity to raise its FAA
claim in state court. Rooker-Feldman requires no more.
In this connection, § 16 of the FAA does not allow Brown & Root
to escape the Rooker-Feldman bar. Section 16 provides for immediate
10
appeal of an order denying a § 4 petition to compel arbitration. 9
U.S.C. § 16(a)(1)(B); see also Harrison v. Nissan Motor Corp., 111
F.3d 343, 348 (3d Cir. 1997) ("[A]n order denying a motion to com-
pel arbitration under the Federal Arbitration Act . . . is immediately
appealable."). Brown & Root suggests that limiting its state appellate
remedies to a writ of prohibition entitles it to bring the instant federal
action. We are not in a position, however, to demand that the state
restructure its appellate system in order for its judgments to be given
effect.
Brown & Root also relies on the Second Circuit's decision in Dis-
tajo, 107 F.3d 126. The Distajo court declined to apply the Rooker-
Feldman bar to petitions in federal district court to compel arbitration
of claims that had been filed in state court. But critical to Distajo was
the court's observation that "[w]e cannot say that [the federal plain-
tiff] is attempting to appeal from any of the state court decisions." 107
F.3d at 138. There is no indication in Distajo that the federal plaintiff
had previously asked a state court to compel arbitration. Here, by con-
trast, Brown & Root's federal petition comes on the heels of the state
court's rejection of practically the same motion.
Whether or not the state court erred in its ruling on the merits of
Brown & Root's motion to compel arbitration is immaterial. We
make no judgment whatsoever on the correctness of the state court's
ruling concerning the applicability of the FAA in this case. Indeed, it
is well established that state courts "have it within both their power
and their proper role to render binding judgments on issues of federal
law, subject only to review by [the United States Supreme] Court."
Asarco, 490 U.S. at 620. As a jurisdictional doctrine, Rooker-
Feldman precludes the lower federal courts from second-guessing the
merits of the state court judgment. See Jordahl , 122 F.3d at 202.
Rather, "[t]he pivotal inquiry is whether the federal plaintiff seeks to
set aside a state court judgment or whether he is, in fact, presenting
an independent claim." Long, 182 F.3d at 555 (internal quotation
marks omitted). Here Brown & Root presents no independent federal
claim. The district court thus properly declined to disturb the state
court judgment.
IV.
"Dominating this case is a simple fact: [The federal plaintiff]
objects to the outcome of a judicial proceeding and filed a separate
11
suit to get around it." GASH Assocs. v. Village of Rosemont, 995 F.2d
726, 727 (7th Cir. 1993). Brown & Root took its best shot on its
motion to compel arbitration in the state courts. It lost in that effort
and now seeks to avoid the Rooker-Feldman bar by attempting to
recast in various ways what occurred in the state trial court. But no
matter how many ways Brown & Root tries to renovate its claim, the
result is the same: Brown & Root cannot obtain what amounts to
appellate review of a state court decision in federal district court.
Respect for state judicial processes and deference to congressional
judgment require no less. The judgment of the district court is accord-
ingly
AFFIRMED.
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