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Meierhenry Sargent LLP v. Williams

United States Court of Appeals, Eighth Circuit

February 6, 2019

Meierhenry Sargent LLP, a South Dakota limited liability partnership Plaintiff - Appellee
v.
Bradley Williams; Kerry Williams Defendants - Appellants

          Submitted: November 13, 2018

          Appeal from United States District Court for the District of South Dakota - Sioux Falls

          Before COLLOTON, SHEPHERD, and STRAS, Circuit Judges.

          STRAS, CIRCUIT JUDGE.

         This appeal presents a pair of issues arising out of a fee dispute between a law firm, Meierhenry Sargent LLP, and two dissatisfied clients, Bradley and Kerry Williams. After removing the firm's lawsuit seeking to recover its unpaid fees to federal court, the Williamses stayed the action to allow the unpaid-fees claim to proceed in arbitration.

         Once in arbitration, the Williamses raised numerous counterclaims and defenses. The firm asked the district court for "relief from [the] stay" and a "declar[ation] [addressing] the scope of the arbitration proceedings." In effect, what the firm sought was a ruling that the Williamses had to pursue most of their counterclaims in court, not in arbitration.

         The district court largely agreed with the firm's request and issued an order dividing the counterclaims into two categories: those the Williamses could raise in arbitration and those they could not. The Williamses ask us to reverse the part of the order denying them the ability to arbitrate some of their counterclaims. We vacate one threshold finding that should have been left for the arbitrators to decide but otherwise affirm.

         I.

         The first question is whether we can hear this appeal at all. The district court has not yet entered a final judgment, see 28 U.S.C. § 1291, so the Williamses urge us to conclude that this is an appeal from "an interlocutory order granting . . . an injunction against an arbitration," which we have jurisdiction to review under 9 U.S.C. § 16(a)(2). The trouble is that the district court did not say it was granting an injunction, nor does its order purport to enjoin the Williamses from arbitrating their claims. Rather, the order simply declares that certain counterclaims "are not before the [a]rbitration panel," while others "remain in arbitration."

         Our jurisdiction rests on the substance of the order, however, not simply what the district court chose to call it. In Conners v. Gusano's Chicago Style Pizzeria, for example, we accepted an interlocutory appeal from an order that "prevent[ed] [a party] from using its agreement with [other parties] to relocate a dispute to an arbitral forum." 779 F.3d 835, 839 (8th Cir. 2015). We looked past the "label" affixed to the order and emphasized its "injunctive effect," which was to deny an "arbitral forum" with "finality." Id. (quoting Nordin v. Nutri/Sys., Inc., 897 F.2d 339, 342 (8th Cir. 1990)); see also Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 287-88 (1988) (explaining that appellate jurisdiction extends to "orders that have the practical effect of granting or denying injunctions and have serious, perhaps irreparable, consequence" (internal quotation marks and citation omitted)).

         To be sure, Conners relied on a general statutory grant of jurisdiction over interlocutory orders "granting . . . injunctions," rather than the arbitration-specific provision we rely on here. 779 F.3d at 839 (citing 28 U.S.C. § 1292(a)(1)); cf. McLaughlin Gormley King Co. v. Terminix Int'l Co., 105 F.3d 1192, 1193 (8th Cir. 1997) (explaining that "appealability [in the arbitration context] is governed by the specific appeal provisions" in 9 U.S.C. § 16). But other than the fact that the arbitration-specific provision is narrower, the operational language in both statutes is the same: they allow appeals from interlocutory orders "granting" an injunction. So labels are no more decisive under one than the other.

         We add that we are unsure what else the district court's order could be, if not an injunction against arbitration. The firm asked the court to declare the scope of the arbitration, but federal courts do not have that sort of general supervisory authority over ongoing arbitration proceedings. Cf. 9 U.S.C. § 16 (listing various orders a district court might issue in connection with an arbitration). To the contrary, the most natural way the district court could have granted the relief the firm sought was by enjoining the Williamses from arbitrating some of their counterclaims. Accordingly, we have appellate jurisdiction under 9 U.S.C. § 16(a)(2).

         II.

         We now turn to the question of whether the counterclaims enjoined by the district court were arbitrable. When arbitrability depends on the interpretation of a contract, as it does here, our review is de novo. See Lyster v. Ryan's Family Steak Houses, Inc., 239 F.3d 943, 945 (8th Cir. ...


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