IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 98-20959
Summary Calendar
____________________
ANTHONY NICHOLAS GEORGIOU; TILLER INTERNATIONAL LIMITED,
Plaintiffs-Appellants,
v.
MOBIL EXPLORATION AND PRODUCING SERVICES INC U.S., ETC; ET AL,
Defendants,
MOBIL EXPLORATION AND PRODUCING SERVICES INC U.S., doing business
as Mobil E&P Ventures CIS; MOBIL OIL CORPORATION; METROMEDIA
INTERNATIONAL TELECOMMUNICATIONS INC,
Defendants-Appellees.
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
(H-98-CV-98)
_________________________________________________________________
July 27, 1999
Before KING, Chief Judge, and EMILIO M. GARZA and DeMOSS, Circuit
Judges.
PER CURIAM:*
Plaintiffs-appellants appeal from an order of the district
court staying litigation before the district court in favor of an
arbitration proceeding currently taking place in London. Because
we conclude that we do not have jurisdiction to entertain this
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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appeal, we dismiss. Furthermore, we deny plaintiffs-appellants’
alternative request for a writ of mandamus.
I. FACTUAL AND PROCEDURAL HISTORY
Plaintiff-appellant Tiller International Limited (Tiller)
and plaintiff-appellant Anthony Nicholas Georgiou (Georgiou)
(collectively, plaintiffs) brought this action in January 1998
seeking damages for breach of contract, fraud, civil conspiracy,
unfair business practices, and tortious interference with
contracts and prospective contracts. Georgiou is a director of
Tiller. Among several defendants named in the complaint were
defendants-appellees Mobil Exploration and Producing Services,
Inc. U.S. (MEPS) and Mobil Oil Corporation (Mobil) (collectively,
defendants). MEPS is a wholly-owned subsidiary of Mobil.1
Plaintiffs’ claims stem from the deterioration of a
contractual relationship between Tiller and MEPS. In 1996, the
two entities entered into negotiations to form a joint venture
for purposes of developing oil and gas reserves in Siberia. In
August 1996, MEPS and Tiller entered into a confidentiality
agreement. In September 1996, they entered into a cooperation
agreement, and in February 1997 they entered into a participation
agreement. All three agreements contain a broadly-worded
arbitration clause or a reference to one. Specifically, the
confidentiality agreement provides that “[a]ny dispute arising
1
Also named as defendant was Metromedia International
Telecommunications Inc. (Metromedia). Metromedia did not file an
appellate brief and has indicated that it adopts the position of
MEPS and Mobile.
2
out of or relating to this Agreement, including any question
regarding its existence, validity or termination, which cannot be
amicably resolved by the Parties, shall be referred to and
finally resolved by arbitration under the rules of the London
Court of International Arbitration in London, England.” The
cooperation agreement contains the same clause, and the
participation agreement incorporates the clause by reference.
The relationship between MEPS and Tiller deteriorated in
July 1997 when MEPS terminated its agreements with Tiller and
instituted arbitration proceedings against Tiller before the
London Court of International Arbitration. In the arbitration
proceedings, MEPS sought an accounting of amounts paid and owing
to Tiller, the repayment of amounts MEPS paid to Tiller to which
MEPS claims Tiller was not entitled by reason of Tiller’s alleged
noncompliance with the agreements, and a declaration that no
further sums are owed by MEPS to Tiller. MEPS also brought a
claim for the tort of deceit based on alleged false
representations by Tiller. Six months after MEPS instituted the
arbitration proceedings, Tiller and Georgiou filed the above-
described complaint in the district court.
Thereafter, in March 1998, defendants filed a motion in the
district court to stay the case in favor of the London
arbitration proceedings. On May 5, 1998, plaintiffs filed an
amended complaint in which they alleged that MEPS had
“fraudulently created and used said . . . agreements and
specifically included arbitration clauses so as to minimize its
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exposure to damage.” They further alleged that MEPS
“deliberately and specifically procured the insertion of the
arbitration clause in both the cooperation agreement and the
participation agreement for the purpose[] [of minimizing its
exposure to damage upon repudiation of the agreements] and thus
plaintiffs allege the said arbitration clauses were fraudulently
induced.”2
On August 27, 1998, the district court granted defendants’
motion for a stay pending the completion of the arbitration
proceedings in London and directed plaintiffs to advise the court
in writing within sixty days of the completion of arbitration
should the case need to be reinstated. In its order, the
district court found that “[p]laintiffs’ allegations that they
were fraudulently induced to enter into the agreements are . . .
arbitrable,” and stayed the claims against all defendants, not
just the claims against MEPS, even though the agreements run
between MEPS and Tiller only, because “the arbitration will
resolve a number of issues relating to claims against [d]efendant
Mobil Oil Corporation and . . . a complete stay will avoid
litigation of this matter on a piecemeal basis.”
On September 11, 1998, plaintiffs filed a motion for
reconsideration before the district court, arguing that the
district court had ignored their allegations that the arbitration
clauses were induced by fraud and had failed to consider that
2
Interestingly, plaintiffs have not raised their claims
that the arbitration clauses were fraudulently induced in the
arbitration proceedings currently underway in London.
4
several parties to the lawsuit were not parties to the
arbitration agreements. By order dated October 8, 1998, the
district court denied the motion for reconsideration, reasoning
that it had in fact previously addressed plaintiffs’ allegations
that the arbitration clauses were induced by fraud when it
concluded that plaintiffs’ allegations of fraud were themselves
arbitrable, and that it had granted the motion to stay against
all parties to avoid piecemeal litigation. Plaintiffs filed
their notice of appeal on October 19, 1998.
II. DISCUSSION
On appeal, plaintiffs argue that the district court erred in
granting the motion to stay litigation pending arbitration
because several defendants are not parties to the arbitration and
because the district court placed no time limitation on the stay.
Plaintiffs further argue that the district court erred in failing
to address the issue of whether there is a valid agreement to
arbitrate and whether the contracts as a whole were part of an
overall scheme to defraud. Plaintiffs request that we reverse
the stay as to all parties, or at least as to the parties not
participating in the arbitration. Alternatively, plaintiffs
request that we order the district court to place a reasonable
time limitation on the duration of the stay.
Defendants contend that the district court did in fact
consider all of plaintiffs’ allegations and properly exercised
its discretion in determining that a stay is warranted pending
the outcome of the arbitration proceedings in London. Defendants
5
argue that plaintiffs never alleged any misrepresentations
pertaining specifically to the arbitration clauses, but instead
merely alleged fraudulent inducement of the contracts as a whole.
According to defendants, the district court therefore properly
found that the issue of fraudulent inducement was itself subject
to arbitration. Defendants also argue that the district court
properly exercised its discretion to stay all claims pending the
results of the arbitration because the claims asserted against
other litigants who are not parties to the arbitration are all
closely related to the claims pending in the arbitration.
Defendants argue that we need not reach these issues, however,
because this court lacks jurisdiction to consider plaintiffs’
appeal of the district court’s order staying litigation pending
arbitration. We agree.
We first address the issue of our jurisdiction. Section 3
of the Federal Arbitration Act (FAA) provides:
If any suit or proceeding be brought in any of the courts of
the United States upon any issue referable to arbitration
under an agreement in writing for such arbitration, the
court in which such suit is pending, upon being satisfied
that the issue involved in such suit or proceeding is
referable to arbitration under such an agreement, shall on
application of one of the parties stay the trial of the
action until such arbitration has been had in accordance
with the terms of the agreement, providing the applicant for
the stay is not in default in proceeding with such
arbitration.
9 U.S.C. § 3. The district court has no discretion to deny the
stay if the issues in the case are within the scope of the
arbitration agreement, at least with respect to the parties to
that agreement. See Hornbeck Offshore (1984) Corp. v. Coastal
6
Carriers Corp. (In re Complaint of Hornbeck Offshore (1984)
Corp.), 981 F.2d 752, 754 (5th Cir. 1993). The district court,
in its discretion, may also stay the proceedings against other
parties not subject to the arbitration agreement pending the
outcome of arbitration as a means of controlling its docket. See
id. at 755 (citing Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 20 n.23 (1983)).
Section 16(b) of the FAA pertains to appeals and states that
“an appeal may not be taken from an interlocutory order . . .
granting a stay of any action under section 3 of this title.” 9
U.S.C. § 16(b). Thus, we must determine whether the district
court’s order granting the stay constitutes an interlocutory
order from which an appeal may not be taken.
“In determining whether an order affecting arbitration is
final or interlocutory, most courts distinguish between
arbitration actions that are independent and those that are
embedded among other claims. Generally, if the only issue
before the court is the dispute's arbitrability, the action
is considered independent and a court's decision on that
issue constitutes a final decision. If, however, the case
includes other claims for relief, an arbitrability ruling
does not end the litigation on the merits, but is considered
interlocutory only.”
Ilva (USA), Inc. v. Alexander’s Daring M/V, 10 F.3d 255, 256 (5th
Cir. 1993) (quoting McDermott Int’l, Inc. v. Underwriters at
Lloyds Subscribing to Memorandum of Ins. No. 104207, 981 F.2d
744, 747 (5th Cir. 1993) (further internal quotation marks
omitted)). Because plaintiffs have appealed from an order of the
district court staying litigation in favor of arbitration, and
because there are other issues before the court besides the
dispute’s arbitrability, the plain language of § 16(b) of the FAA
7
denies this court jurisdiction to review the district court’s
order. See Altman Nursing, Inc. v. Clay Capital Corp., 84 F.3d
769, 770-71 (5th Cir. 1996); McDermott, 981 F.2d at 747-48;
Turboff v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 867 F.2d
1518, 1520-21 (5th Cir. 1989).
Plaintiffs contend that because there are parties to the
dispute who are not parties to the arbitration proceedings, we
should reach a different conclusion with respect to our
jurisdiction. However, in both McDermott and West of England
Ship Owners Mutual Insurance Association (Luxembourg) v. American
Marine Corp., 981 F.2d 749 (5th Cir. 1993), the district court’s
stay applied to parties not subject to arbitration, but we
nevertheless concluded that we lacked jurisdiction to review the
propriety of the stay. See West of England Ship Owners Mut. Ins.
Assoc., 981 F.2d at 750-51 (“[T]he district court . . . stayed
the proceeding as to all defendants, including those not subject
to the arbitration agreement. . . . [T]he orders were
interlocutory, and appeal is barred by § 16(b).”); McDermott, 981
F.2d at 748 (describing claims between parties not participating
in arbitration that were stayed by district court, but
nevertheless concluding that “[b]ecause the district court’s
orders were interlocutory, not final, appeal is barred by
§ 16(b)”). Thus, plaintiffs’ argument lacks merit.3
3
Even were we to conclude that § 16(b) only denied us
jurisdiction to consider the appeal of parties to the
arbitration, we would still conclude that we lack jurisdiction to
consider the appeal of others not party to the arbitration in
this case because the appeal is interlocutory and, as described
8
Plaintiffs urge us to find 28 U.S.C. § 1292(a)(1)
jurisdiction under the Supreme Court’s decision in Gulfstream
Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271 (1988). This
argument is equally unavailing. In Gulfstream, the Supreme Court
stated that a stay order, under very limited circumstances, may
be appealed as an interlocutory order granting or refusing an
injunction under 28 U.S.C. § 1292(a)(1). See id. at 287-88.
Specifically, § 1292(a)(1) provides appellate jurisdiction “over
orders that grant or deny injunctions and orders that have the
practical effect of granting or denying injunctions and have
serious, perhaps irreparable, consequence.” Id. (internal
quotation marks omitted). Plaintiffs argue that the district
court’s stay order has the practical effect of granting an
injunction and will lead to serious, irreparable consequences.
Even if we agreed with this contention, under our precedent, this
avenue of review is foreclosed to plaintiffs after Congress
amended the FAA to preclude our jurisdiction to review an
interlocutory order that stays an action in district court
pending arbitration. See Turboff, 867 F.2d at 1520-21
(“[Congress’s amendment to the FAA] also eliminates any vestige
of uncertainty surrounding the scope of Gulfstream . . . in
arbitration cases. . . . Thus, in the absence of a § 1292(b)
certificate from the district court, we have no jurisdiction over
its interlocutory orders concerning arbitration.”); Jolley v.
Paine Webber Jackson & Curtis, Inc., 864 F.2d 402, 404 (5th Cir.
infra, all other avenues of jurisdiction are foreclosed.
9
1989) (“Gulfstream held that orders granting or denying stays of
legal proceedings on equitable grounds are not automatically
appealable under § 1292(a)(1). . . . The district court’s order
granting a stay pending arbitration is not appealable under
§ 1292(a)(1).”) (internal quotation marks, citation, and emphasis
omitted), supplemented by 867 F.2d 891 (5th Cir. 1989).4
Next, plaintiffs rely on the collateral order doctrine in an
attempt to establish a basis for our jurisdiction. We have
jurisdiction to review a collateral order so long as the order
“(1) conclusively determine[s] the disputed question; (2)
resolve[s] an important issue completely separate from the merits
of the action; and (3) [is] effectively unreviewable on appeal
from a final judgment.” Jolley, 864 F.2d at 404. In Jolley, we
held that a district court order granting a stay pending
arbitration is not appealable under the collateral order doctrine
because such an order is reviewable on appeal from a final
judgment, and thus does not meet the third requirement of the
collateral order doctrine. See id. We reached this conclusion
because the parties will have an opportunity to obtain a final
judgment from the district court after arbitration and can then
seek review of that final judgment. See id.; West of England
Ship Owners Mut. Ins. Assoc., 981 F.2d at 751 & n.9.
4
Moreover, in the event that Gulfstream is still
applicable to an appeal of a discretionary stay by a party not
subject to the arbitration agreement, we conclude that plaintiffs
have not met the requirements of Gulfstream because they have not
shown that serious or irreparable consequences will flow from the
district court’s stay order.
10
Plaintiffs argue that they will not have the opportunity to seek
review after the arbitration concludes because the issues in the
London arbitration are not the same as the issues at stake in the
district court. According to plaintiffs, the issues in London
are limited to those raised by MEPS and do not include the issues
raised by plaintiffs in their federal court action. As
defendants point out, however, plaintiffs have the opportunity to
raise any of the claims that are currently pending in district
court as counter-claims or defenses in the arbitration proceeding
and may not complain that there will be no review of the issues
that they have chosen not to raise for strategic reasons in
arbitration. We therefore refuse to depart from our circuit
precedent to allow plaintiffs to appeal the district court’s stay
under the collateral order doctrine.
Finally, plaintiffs seek our review of the district court’s
order via an application for writ of mandamus. A writ of
mandamus is “an extraordinary remedy, reserved for extraordinary
situations.” McDermott, 981 F.2d at 748. We have traditionally
exercised our mandamus power “only ‘to confine an inferior court
to a lawful exercise of its prescribed jurisdiction or to compel
it to exercise its authority when it is its duty to do so.’” Id.
(quoting Gulfstream, 485 U.S. at 289). Plaintiffs have the
burden of demonstrating a “‘clear and indisputable’” right to
mandamus before we are authorized to issue a writ. Id. (quoting
Gulfstream, 485 U.S. at 289). Because Congress has expressly
limited interlocutory review of a district court’s decision to
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stay arbitration, plaintiffs bear a particularly heavy burden.
See id. Plaintiffs have failed to carry the burden in this case.
Contrary to plaintiffs’ assertions, the district court did not
fail to consider their arguments, and did not clearly overstep
its authority in staying these proceedings pending the outcome of
the London arbitration. It is a well-established principle that
“a writ of mandamus is not to be used as a substitute for
appeal.” Id. We therefore deny plaintiffs’ application for the
writ and dismiss this appeal for lack of jurisdiction.
III. CONCLUSION
For the foregoing reasons, we DISMISS plaintiffs’ appeal for
lack of jurisdiction and DENY the application for writ of
mandamus.
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