5th Circuit Blog

Fifth Circuit Panel Splits on Whether It Has Jurisdiction to Review a Remand Order to an Arbitration Panel for Clarification of the Arbitral Award

By Razvan Ungureanu on July 25, 2014


Section 16 of the Federal Arbitration Act allows an appeal from, among other things, “a final decision with respect to an arbitration that is the subject of [the FAA].”  Does this provision allow an appeal from an order and accompanying final judgment that do not vacate an arbitration award, but remand the case to the arbitration panel for clarification or further consideration of the award?  In other words, are such remand orders and final judgments “final decisions” within the meaning of Section 16 of the FAA?

Murchison Capital Partners, L.P. v. Nuance Commc’ns involved an underlying arbitration proceeding in which the plaintiffs made two damages claims: a claim for out-of-pocket damages and a claim for benefit-of-the-bargain damages.  After they lost in arbitration, the plaintiffs moved to vacate and remand the arbitration award, arguing that the arbitration panel exceeded its authority by failing to issue specific findings of fact and conclusions of law with respect to the out-of-pocket damages claim.  (The arbitration agreement required the arbitrators to support an award with “written findings of fact and conclusions.”)  After concluding that the arbitration panel did not provide sufficient findings of fact and conclusions of law, the district court did not vacate the award, but remanded the case to the arbitration panel for consideration of the out-of-pocket damages claim and entered final judgment.  The district court did not retain jurisdiction over the case.

The district court’s remand order and accompanying final judgment sound like a “final decision,” at least in the sense that the district court had disposed of and was done with the case.  But a panel majority dismissed the defendant’s appeal for lack of jurisdiction.  The Court first relied on a footnote in a 1990 Fifth Circuit decision that stated that a remand order to an arbitration panel for clarification was not a final appealable order.  That 1990 decision, in turn, cited a 1965 Ninth Circuit opinion involving a remand order in a case in which the district court remanded but retained jurisdiction.

As the dissent points out, the panel majority’s decision is at odds with Supreme Court precedent.  In Green Tree Fin. Corp. v. Randolph, 531 U.S. 79 (2000), the Supreme Court explained that a “final decision” as that term is used in Section 16 of the FAA is a “decision that ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment.”  The panel majority distinguished Green Tree on its facts.  That is, the panel majority held that in Green Tree the district court dismissed the case with prejudice and compelled arbitration.  (In Green Tree, the defendants moved to dismiss and compel arbitration based on the existence of an arbitration clause.)  By contrast, there was no dismissal order in Murchison Capital: “Here . . . the district court did not dismiss the parties’ case (in fact, the court denied [the defendant’s] motion to dismiss), nor did it vacate or confirm the award, but simply entered a judgment remanding the award for further clarification.”  

The panel majority’s analysis is not particularly persuasive.  Whether or not the district court granted a motion to dismiss, the district court’s remand order and final judgment both ended the litigation on the merits and left nothing more for the district court to do.  The remand order and final judgment ended the litigation on the merits because the district court fully addressed the plaintiffs’ request to vacate and remand: the court refused to vacate the award, but remanded.  And the remand order and final judgment left nothing more for the court to do because the district court did not retain jurisdiction: after it entered final judgment, the district court’s work on the case was done.  Though the panel majority held otherwise, Green Tree supports the opposite result.   

 

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