Comanche Indian Tribe of Oklahoma v. 49, L.L.C.

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
DEC 9 2004
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

COMANCHE INDIAN TRIBE OF
OKLAHOMA,

Plaintiff-Appellant,
v. No. 03-6167
49, L. L. C., an Oklahoma Limited
Liability Company,

Defendant-Appellee,

AMERICAN ARBITRATION
ASSOCIATION,

Defendant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
(D.C. NO. CV-03-18-R)

Olin Joseph Williams (Gary S. Pitchlynn with him on the briefs) Pitchlynn &
Morse, P. A., Norman, Oklahoma, for Plaintiff-Appellant.

John J. Gruttadaurio (Melvin L. McDaniel, Oklahoma City, Oklahoma, with him
on the briefs) Filzer & Gruttadaurio, P.L.L., Maitland, Florida, for Defendant-
Appellee.

Before BRISCOE , BALDOCK , and TYMKOVICH , Circuit Judges.
TYMKOVICH , Circuit Judge.

The Comanche Indian Tribe of Oklahoma (“the Tribe”) appeals an order

staying proceedings in the district court and compelling arbitration of its dispute

with 49, L.L.C. (“49”). Lacking jurisdiction, we dismiss the appeal.

I. Factual Background

The underlying dispute in this case relates to a series of contracts that the

parties entered into between November 2000 and January 2001. Without delving

into detail, those contracts provided that 49 would lease gaming machines to the

Tribe, and the Tribe would offer those machines for play at gaming casinos

located on tribal land, including a new gaming facility that had not yet been

constructed. The contracts also provided that 49 would loan to the Tribe $3

million for the building of the new gaming facility. 49 leased the machines and

loaned the money. In July 2001, however, a dispute arose and the Tribe

demanded that 49 remove its machines, which it did. Pursuant to an arbitration

clause, 49 then submitted a demand for arbitration, alleging that the Tribe had

breached the contracts in numerous ways. 1

1
The arbitration clause reads: “In the event of any dispute hereunder
between [the Tribe] and 49, the parties agree to submit any such dispute,
including but not limited to, any issue of contract interpretation or of Federal law,
to arbitration in Oklahoma County, State of Oklahoma, in accordance with
Arbitration Procedures attached hereto . . . .” Aplt. App. at 30, 45.

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 The Tribe moved to dismiss the demand for arbitration. The Tribe argued

in part that it had not effectively waived its sovereign immunity because the

Tribe’s Chairman, who was signatory to the contracts, did not have the necessary

authority to enter the contracts, and thus the waiver of sovereign immunity

contained in the contracts was not valid. 2 Shortly after filing its motion to

dismiss the demand for arbitration, the Tribe filed suit in federal district court

seeking declaratory and injunctive relief, including an order restraining the

arbitration panel from exercising jurisdiction. The Tribe made numerous

arguments to the district court, all of which were aimed at nullifying the contracts

and thus preserving the Tribe’s claims of sovereign immunity. 3 49 filed a

2
The waiver of sovereign immunity clause reads in relevant part: “[The
Tribe] does not waive, limit or modify its sovereign immunity from unconsented
suit or judicial litigation, except that [the Tribe] explicitly warrants and represents
to 49, as a material inducement to cause 49 to enter into this Agreement and
perform the obligations 49 has agreed to perform hereunder, that any
disagreement or dispute between the parties as to the interpretation, enforcement
or breach of this Agreement, or the parties’ rights or obligations thereunder shall
be resolved pursuant to [binding arbitration administered by the American
Arbitration Association].” Aplt. App. at 30, 45.
3
The Tribe argued the contracts were invalid for three reasons: (1) the
contracts were “management contracts” under the Indian Gaming Regulatory Act
(“IGRA”), 25 U.S.C. § 2711, thus requiring approval by the National Indian
Gaming Commission, which approval had not been received; (2) the contracts
“encumbered” the Tribe’s land for more than seven years, thus requiring approval
by the Secretary of the Interior under 25 U.S.C. § 81(b), which approval had not
been received; and (3) the contracts violated Article XII, § 1 of the Tribe’s
Constitution because the Tribe’s Chairman had allegedly entered into the
contracts without express authorization from the Comanche Tribal Council. Aplt.
(continued...)

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counterclaim seeking damages and a declaration that the arbitration panel had

jurisdiction to hear the underlying breach of contract claim. 49 separately moved

to stay the proceedings and compel arbitration. The district court rejected the

Tribe’s arguments, finding instead that all but one of the contracts were valid and

that the Tribe had waived its sovereign immunity. Accordingly, the district court

stayed the proceedings and compelled arbitration. This appeal followed.

II. Appealability of Stay Order under the Federal Arbitration Act

The Federal Arbitration Act, 9 U.S.C. § 1 et seq., manifests a “liberal

federal policy favoring arbitration.” Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20, 25 (1991) (quotations omitted). Section 16 of the FAA governs our

review of a district court’s decision to stay proceedings in favor of arbitration.

Under § 16(a)(3), a party may appeal a “final decision with respect to an

arbitration that is subject to this title.” Section 16(b)(1), however, states that “an

appeal may not be taken from an interlocutory order granting a stay of any action

under section 3 of this title.” Thus, the issue in this case is whether the district

court’s order was a “final decision with respect to an arbitration” under § 16(a)(3)

or an “interlocutory order granting a stay” under § 16(b)(1). The one is

immediately appealable, the other is not.

3
(...continued)
App. at 17–20.

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 Before we reach this question, however, we must first address the Tribe’s

argument that the FAA does not even apply in this case. 4 The FAA applies to all

arbitration agreements “involving commerce,” 9 U.S.C. § 2, and “create[s] a body

of federal substantive law of arbitrability, applicable to any arbitration agreement

within the coverage of the Act.” Moses H. Cone Memorial Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 24 (1983). The requirement that the underlying

transaction involve commerce “is to be broadly construed so as to be coextensive

with congressional power to regulate under the Commerce Clause.” Foster v.

C.F. Turley, Jr., 808 F.2d 38, 40 (10th Cir. 1986) (citations omitted). The

Supreme Court has stated that the FAA’s “involving commerce” requirement

“reaches not only the actual physical interstate shipment of goods but also

contracts relating to interstate commerce.” Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 388 U.S. 395, 401 n.7 (1967) (quoting H.R. Rep. No. 96, 68th Cong.,

1st Sess. 1 (1924)); see also Allied-Bruce Terminix Cos., Inc., v. Dobson, 513

4
The FAA alone cannot confer subject matter jurisdiction on the federal
courts without an independent jurisdictional basis. Moses H. Cone Memorial
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983) (noting that the FAA
requires an independent basis for subject matter jurisdiction). In this case, the
Tribe’s district court complaint was based in part on the Indian Gaming
Regulatory Act, 25 U.S.C. §§ 2701 et seq., and 25 U.S.C. § 81. Thus, the district
court had jurisdiction under 28 U.S.C. § 1331 (federal question jurisdiction).
Further, contrary to the Tribe’s assertion, 9 U.S.C. § 4 does not require that 49
assert a separate and independent jurisdictional basis from that asserted by the
Tribe.

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U.S. 265, 273–74 (1995) (holding that “involving commerce” is the functional

equivalent of “affecting commerce”).

In this case, 49 has its principal place of business in Illinois, while the

Tribe is a federally-recognized Indian Tribe located in Oklahoma. The contracts

between the parties therefore relate to and affect interstate commerce. This

conclusion is bolstered by the statement of 49’s counsel at oral argument that the

gaming machines it leased to the Tribe originated in California. See, e.g., Allied-

Bruce, 513 U.S. at 282 (finding that § 2’s “involving commerce” requirement was

met where the parties were from different jurisdictions and the materials at issue

came from outside the forum state). We therefore hold that the contracts at issue

relate to interstate commerce, and the FAA applies to this dispute.

The Tribe argues next that, even if the FAA applies, the district court’s

order is an appealable “final decision” under § 16(a)(3). We reject this argument.

In Green Tree Financial Corp.–Alabama v. Randolph, the Supreme Court held

that the term “final decision” as used in § 16(a)(3) means “a decision that ends

the litigation on the merits and leaves nothing more for the court to do but

execute the judgment.” 531 U.S. 79, 86 (2000) (citations and quotations omitted).

The district court in Green Tree had dismissed the claims with prejudice, leaving

nothing for the court to do except execute judgment, and thus “dispos[ing] of the

entire case on the merits and [leaving] no part of it pending before the court.” Id.

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In such circumstances an appeal was allowed under § 16(a)(3). The Court noted,

however, that “[h]ad the District Court entered a stay instead of a dismissal in this

case, that order would not be appealable.” Id. at 87 n.2 (citing 9 U.S.C. §

16(b)(1)); see also Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d

307, 309–10 (5th Cir. 2003) (interpreting Green Tree and holding that the district

court’s stay of proceedings pending arbitration was not appealable under

§ 16(b)(1)).

Here, rather than dismissing the case, the district court entered a stay

pending arbitration. We therefore have no difficulty in holding that the district

court’s order is not appealable at this time. Although it is true that the district

court made substantive rulings with respect to issues such as IGRA and signatory

authority, it did so for the limited purpose of determining whether the arbitration

clause in the contracts was valid and enforceable. 5 Having decided that all but

one of the contracts were valid, the court then did exactly what it was required to

5
The Tribe argues that we have appellate jurisdiction because the Tribe is
challenging Chairman Wauqua’s authority to bind the Tribe to the agreement to
arbitrate. However, in the absence of a “final decision” under § 16(a)(3), this
court does not have appellate jurisdiction simply because the district court may
have erred in its determination regarding an issue that goes to making of the
agreement to arbitrate. The FAA “evidences a pro-arbitration tilt, which requires
that . . . the party opposing arbitration . . . bear the initial consequence of an
erroneous district court decision requiring arbitration.” ATAC Corp. v. Arthur
Treacher’s, Inc., 280 F.3d 1091, 1101 (6th Cir. 2002) (citation and quotation
omitted).

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do under the FAA: it stayed the proceedings and compelled arbitration. 9 U.S.C.

§ 3. 6 In so doing, the district court did not dispose of the entire case on the

merits. In fact, the district court specifically stated in its order that it would not

consider the Tribe’s motion to dismiss 49’s counterclaim because it was

“premature,” indicating that the district court understood it was not disposing of

the case entirely. The court, moreover, also ruled in the Tribe’s favor concerning

one of the contracts. Following the arbitrator’s determination on the underlying

breach of contract claim, the Tribe may return to the district court to seek a

review of the award under the criteria laid out 9 U.S.C. § 10. Following such a

review, the Tribe (and 49) may appeal to this court and raise challenges to the

district court’s order, including the Tribe’s argument that the arbitration clause is

unenforceable because it has not effectively waived its sovereign immunity. See

Pioneer Properties, Inc. v. Martin, 776 F.2d 888, 891 (10th Cir. 1988).

III. Conclusion

6
This section reads: “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.” (emphasis added).

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 The district court’s order staying the proceedings and compelling

arbitration was not a final decision on the merits. As such, we lack jurisdiction

over this appeal under 9 U.S.C. § 16(b)(1). Accordingly, we DISMISS the

appeal.

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