Friday, August 29, 2014

Seventh Circuit Discusses When Party May Bring Interlocutory Appeal From Order Denying a Petition to Order Arbitration to Proceed

By Myriam Z. Kasper
Chief Assistant Corporation Counsel, Appeals Division, City of Chicago Department of Law

In Central States, Southeast and Southwest Areas Pension Fund v. US Foods, Inc., No. 13-1566 (7th Cir. July 30, 2014), the United States Court of Appeals for the Seventh Circuit held that it lacked jurisdiction over an interlocutory appeal seeking an order that would direct certain action by an arbitrator in a pending arbitration under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). The case involved arbitration resulting from an employer withdrawing from a multiemployer pension fund under the MPPAA and the Seventh Circuit’s holding provides helpful insight regarding when a party may bring an interlocutory appeal under the Federal Arbitration Act (FAA) from an order denying a petition to order arbitration to proceed.

The Central States Pension Fund (Fund) assessed liability against US Foods in 2008 and 2009 because US Foods withdrew in part from an underfunded multiemployer pension plan. Pursuant to the MPPAA, US Foods could request arbitration within a certain time period, “though unlike normal arbitration[,] it is neither contractual nor consensual.” US Foods made that request within the statutory limit for the 2009 assessment, but did not make a timely request for arbitration with respect to the 2008 assessment. Meanwhile, the Fund sued US Foods to collect the 2008 assessment. US Foods requested that the district court order the arbitrator in the pending arbitration regarding the 2009 assessment to consider the amount owed for 2008 as well, but the district court refused.

US Foods filed an interlocutory appeal, invoking section 16(a)(1)(b) of the FAA, which authorizes an interlocutory appeal from an order “denying a petition under section 4 of this title to order arbitration to proceed.” The Seventh Circuit dismissed the appeal for lack of jurisdiction. In doing so, the reviewing court first explained that section 16(a)(1)(b) of the FAA pertains only to petitions under section 4 of the FAA. Section 4 of the FAA, in turn, authorizes an aggrieved party to petition a district court for an order “directing that . . . arbitration proceed in the manner provided for” in a written agreement for arbitration. US Foods and the Fund, however, had no agreement. Although the reviewing court suggested that perhaps arbitration proceedings under the MPPAA should be treated the same as arbitrations pursuant to a contract, it noted that no court of appeals had addressed that issue or otherwise decided whether the FAA authorizes an interlocutory appeal in a proceeding under the MPPAA. Therefore, the Seventh Circuit refused to do so as well.

Nonetheless, the Seventh Circuit concluded that, regardless whether the FAA authorizes an interlocutory appeal in a proceeding under the MPPAA, jurisdiction in this case would still be lacking. The reviewing court noted that US Foods, in effect, wanted the 2008 assessment “added to the agenda of the arbitrator who is already serving” in the arbitration regarding the 2009 assessment. That was not a request for an order directing arbitration within the meaning of section 4 of the FAA. Nor is a court’s order refusing to interfere with the conduct of an arbitration an order denying a petition to order arbitration to proceed, for purposes of section 16(a)(1)(b). Citing Blue Cross Blue Shield of Massachusetts, Inc. v. BCS Insurance Co., 671 F.3d 635 (7th Cir. 2011), the reviewing court noted that “a party’s request to tell an arbitrator how to act in a pending proceeding is not a request to compel arbitration, no matter what caption the litigant puts on its motion.” The reviewing court further emphasized that “judges must not intervene in pending arbitration to direct arbitrators to resolve an issue one way rather than another. . . . Review comes at the beginning or the end, but not in the middle. Until the arbitration was over, the matter was “in the hands of arbitrator.” (quoting Blue Cross Blue Shield, 671 F.3d at 638).

Recommended Citation: Myriam Z. Kasper, Seventh Circuit Discusses When Party May Bring Interlocutory Appeal From Order Denying a Petition to Order Arbitration to Proceed, The Brief, (August 29, 2014),

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