United States Court of Appeals
Fifth Circuit
F I L E D
In the May 21, 2007
United States Court of Appeals Charles R. Fulbruge III
For the Fifth Circuit Clerk
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m 06-30372
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OMNI HOTELS MANAGEMENT CORPORATION,
Plaintiff-Appellee,
VERSUS
PHILIP BAYER; KIM W. BAYER; JOHN PATRICK BLANCANEAUX;
WILLIAM H. COURET, III; VANESSA HARVEY; TAMARA LANG; HAYWOOD BUSH;
BERNARD AINSWORTH; ARCEAL BUTLER, SR.; ROBERT R. DABNEY;
CYNTHIA M. DANIELS; ANDREW P. DAVIS; DIANA P. DAVIS; BOBBY HARDY;
ALIDA JOHNSON; SHEDRICK JOURNEE; MARSHALL POWELL;
SCHFREDA PATRICE THOMAS; EVERT WILLIAMS; CLEOPHUS BENSON, JR.;
PRISCILLA CEASAR; JOYCE ROBAIR; BENNIE SCOTT,
Defendants-Appellants.
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Appeal from the United States District Court
for the Eastern District of Louisiana
m 2:05-CV-1883
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Before GARWOOD, SMITH, and DEMOSS, employees of OHMC (collectively “state court
Circuit Judges. plaintiffs”) brought a class action in Louisiana
state court alleging damages from exposure to
JERRY E. SMITH, Circuit Judge:* toxic mold. The complaint listed as defendants
OHMC, 535 Gravier, L.L.C. (the management
Present and past employees of the Omni company), Decatur, Omni Royal Crescent
Hotels Management Corporation (“OHMC”) Corporation, William Sherrer, and Gerard
brought a state court class action against Vitrano. Of the defendants, only OHMC had
OHMC and several of its subsidiaries, seeking complete diversity from the state plaintiffs.
damages for exposure to toxic mold at the OHMC and its subsidiaries filed a dilatory
Omni Royal Crescent Hotel. OHMC filed this exception of prematurity, claiming that some
declaratory judgment action seeking to enforce of the employees were bound by arbitration
an arbitration agreement binding its employ- agreements. Although there was considerable
ees. The district court ruled that the arbitra- discovery in state court, the issue of the arbitr-
tion agreement was binding, so it compelled ability of the claims was not resolved.
arbitration and enjoined the defendants from
maintaining a state court action. We affirm. In May2005, OHMC brought a declaratory
judgment action against the state court plain-
I. tiffs, seeking to enforce arbitration against any
Effective May 2003, OHMC adopted a employees who were subject to the agreement,
written, mandatory arbitration agreement, for and to enjoin any state court plaintiff from
all employees nationwide, under which all em- seeking to represent employees who were
ployment-related claims are to be resolved subject to the agreement. The district court
through mandatoryarbitration. The agreement granted OHMC a declaratory judgment that
explicitly covers “personal injury and employ- the agreements were enforceable, compelled
ment-related tort claims (including claims for those employees who were employed by
negligence, gross negligence, and intentional OHMC after May 2003 to arbitrate their
harm).” Employees were provided a copy of claims, and granted a preliminary injunction
the agreement stating both that continued em- “(1) barring these employee defendants from
ployment was predicated on their agreement to participating in the state suit against [OHMC],
arbitrate and that continued employment pro- and (2) barring all defendants from acting as
vided consideration for the agreement. Em- class representatives in the state suit for a class
ployees were also given a receipt that they including such persons.” The state court
were requested to sign as proof of notice. plaintiffs appeal that order.
Several employees refused to sign, in some
cases writing “refused” on the receipt. II.
OMHC claims we have no appellate juris-
In November 2003, employees and former diction, but we disagree. To begin with, we
have jurisdiction to determine our own juris-
diction. Cerveceria Cuauhtemoc Moctezuma
*
Pursuant to 5TH CIR. R. 47.5, the court has de- S.A. de C.V. v. Mont. Beverage Co., 330 F.3d
termined that this opinion should not be published 284, 286 (5th Cir. 2003). Beyond that, under
and is not precedent except under the limited cir- the express appellate jurisdiction provisions of
cumstances set forth in 5TH CIR. R. 47.5.4. the Federal Arbitration Act (“FAA”),
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except as otherwise provided in 28 U.S.C. ate appeal.
§ 1292, an appeal may not be taken from an
interlocutory orderSS (1) granting a stay of We observed that when “the district court
any action under section 3 of this title; (2) granted the sole remedy sought by the plaintiff
directing arbitration to proceed under in the Federal ActionsSSan order compelling
section 4 of this title; (3) compelling arbi- arbitration,” that order was not interlocutory,
tration under section 206 of this title; but rather final. Id. at 391. Because there was
“nothing left for the court to do but execute
9 U.S.C. § 16(b). The FAA’s appellate provi- the judgment . . . the order compelling arbitra-
sions reflect the Congressional preference for tion in the Federal Actions ended the litigation
arbitration as a way of resolving disputes “by in federal court on the merits and was a final
authorizing immediate appeals from orders dis- appealable decision under 9 U.S.C. § 16-
favoring arbitration and forbidding immediate (a)(3).” Id. Turning to the federal injunction,
appeals from orders favoring arbitration.” we strictly interpreted § 16(b) only to deprive
Apache Bohai Corp. v. Texaco China, B.V., this court of jurisdiction over appeals from
330 F.3d 307, 309 (5th Cir. 2003). If the stays granted under 9 U.S.C. § 3, which, “by
original state lawsuit had been filed in federal its terms, does not authorize a federal court to
court, and the district court had stayed the enjoin state proceedings. . . . Such a stay
proceedings while compelling arbitration, we could not be properly issued pursuant to sec-
would lack jurisdiction over the appeal. See tion 3.” Id. at 392. The district court’s order
Mire v. Full Spectrum Lending, Inc., 389 F.3d in Brown was immediately appealable in full.
163 (5th Cir. 2004); Apache Bohai, 330 F.3d Brown, 462 F.3d at 393.
at 309-10.
OHMC’s declaratory judgment action re-
Here, however, the order compelling arbi- quested that the district court compel arbitra-
tration was obtained in an independent federal tion and issue an injunction barring certain
proceeding and was coupled with an injunction state court plaintiffs from participation in the
barring several of the state court plaintiffs state class action. When the court compelled
from proceeding with their state suit. We ex- arbitration, OHMC received all the relief it
amined appellate jurisdiction in this procedural sought in the district court, so, under Brown,
posture in Brown v. Pac. Life Ins. Co., 462 that order was a final appealable order under
F.3d 384. 9 U.S.C. § 16(a). The injunction against Bay-
er affecting the state court action could not
There, plaintiffs brought a fiduciary duty have been issued under § 3, and thus it is ap-
suit in state court against Smith Barney and a pealable under 28 U.S.C. § 1292(a), which
non-diverse investment representative. Smith authorizes appeals from interlocutory orders
Barney removed to federal court, although the “granting, continuing, modifying, refusing or
case was remanded for improper removal dissolving injunctions.” It follows that this
procedure. Smith Barney then filed a separate court has jurisdiction over the state court
federal action seeking to stay all state court plaintiffs’ appeal.
proceedings, and to compel arbitration of all
claims. The district court ruled for Smith Bar- III.
ney, staying the state court action and compel- On the remaining issues, after considering
ling arbitration. The Browns sought immedi- the written and oral arguments of the parties
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and the pertinent portions of the record com-
piled for this appeal, we affirm the judgment,
essentially for the reasons assigned in the dis-
trict court’s Order and Reasons: The threat of
piecemeal and inconsistent litigation does not
make those state court defendants who are not
diverse to the state court plaintiffs indispens-
able parties under Federal Rule of Civil Proce-
dure 19. See Brown, 462 F.3d at 393; Snap-
On Tools Corp. v. Mason, 18 F.3d 1261 (5th
Cir. 1994); Moses H. Cone Mem. Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 19-21
(1983). Abstention is inappropriate in the
arbitration setting where a balancing of the
Colorado River factors does not weigh very
heavily against the exercise of jurisdiction. See
Brown, 462 F.3d at 396; Moses H. Cone, 460
U.S. at 25-26. Control of discovery is com-
mitted to the sound discretion of the trial
court, and it did not err by ruling on the mo-
tion to compel arbitration without deferring
for further discovery, particularly given the
Federal Arbitration Act’s requirement of “an
expeditious and summary hearing, with only
restricted inquiry into factual issues.” Id. at
22. The district court was correct that the em-
ployees were bound by the agreement under
Louisiana law even if they refused to sign it,
and the state court plaintiffs have failed to
demonstrate the requisite knowledge on the
part of OHMC to establish error or fraud that
could vitiate consent.
The order appealed from is AFFIRMED.
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