United States v. 2005-01-18 | 03-16004 | DEES VBILLY | precedential | opinion |

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 DOUGLAS DEES,
Plaintiff-Appellant, No. 03-16004
v. D.C. No.
 CV-02-00303-HDMHELMUTH T. BILLY, M.D.; GREGORY
E. GINN, M.D., OPINION
Defendants-Appellees. 
Appeal from the United States District Court
for the District of Nevada
Howard D. McKibben, District Judge, Presiding
Argued and Submitted
December 9, 2004—San Francisco, California
Filed January 19, 2005
Before: Diarmuid F. O’Scannlain, Robert E. Cowen,* and
Carlos T. Bea, Circuit Judges.
Opinion by Judge O’Scannlain
*The Honorable Robert E. Cowen, Senior United States Circuit Judge
for the Third Circuit, sitting by designation.
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COUNSEL
W. Ruel Walker, Oakland, California, argued the cause for
the appellant; Carl M. Hebert, Reno, Nevada, was on the
briefs.
Denise H. Greer, Schmid & Voiles, Los Angeles, California,
argued the cause for the appellees; Patricia Egan Daehnke,
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Bonne, Bridges, Mueller, O’Keefe & Nichols, Las Vegas,
Nevada, was on the brief.
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether we have jurisdiction to review a
district court order that stayed the plaintiff’s medical malprac-
tice action, compelled arbitration, and administratively closed
the case.
I
In February 1998, Douglas Dees was diagnosed by his fam-
ily physician as suffering from elevated blood calcium levels
and was referred to Drs. Helmuth Billy and Gregory Ginn
(“Doctors”) for treatment. During his first visit to the Doctors’
office, Dees signed a one-page “Physician-Patient Arbitration
Agreement,” which provides that the parties will resolve any
medical malpractice disputes through arbitration.1 Dees
claims that he was required to sign the agreement before see-
ing the Doctors and that the office staff did not explain the
terms of the agreement to him.
In August 1998, the Doctors operated on Dees in an effort
to alleviate his persistent disorder. Dees claims that his left
phrenic nerve was negligently severed during the procedure,
1The arbitration clause states:
It is understood that any dispute as to medical malpractice, that
is as to whether any medical services rendered under this contract
were unnecessary or unauthorized or were improperly, negli-
gently, or incompetently rendered, will be determined by submis-
sion to arbitration as provided by California law, and not by a
lawsuit or resort to court process except as California law pro-
vides for judicial review of arbitration proceedings.
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which resulted in the paralysis of his left lung, and he subse-
quently filed a complaint against the Doctors with the Nevada
Medical-Legal Screening Panel. The Panel concluded that
there was a “reasonable probability” that Dees had been
injured by Dr. Billy’s negligence,2 and in May 2002, Dees
filed a malpractice action against Dr. Billy in Nevada state
court. Dees also named Dr. Ginn, who was Dr. Billy’s
employer, as a defendant on a respondeat superior theory.
The Doctors removed the case to the United States District
Court for the District of Nevada on the basis of diversity of
citizenship, and, invoking the Physician-Patient Arbitration
Agreement, they petitioned the district court for an order com-
pelling arbitration. In opposition to the Doctors’ motion, Dees
argued that the arbitration agreement was unenforceable
because it was both unconscionable and a contract of adhe-
sion under Nevada law. The matter was referred to a magis-
trate judge, who concluded that the agreement was valid and
that the case should be submitted to arbitration. The district
court affirmed the magistrate judge’s decision and issued an
order that stayed the action, compelled arbitration, and admin-
istratively closed the case.3 Dees filed a timely notice of
appeal.
II
Dees argues that he is entitled to pursue his malpractice
claim in a judicial forum because the Physician-Patient Arbi-
tration Agreement is unconscionable and a contract of adhe-
sion. Before we address the merits of Dees’s appeal, however,
we must resolve whether we have jurisdiction to review the
district court’s order.
2Nevada Revised Statutes 41A.016(1) formerly required a plaintiff to
submit a malpractice claim to a screening panel before filing suit. This
provision was repealed in 2002.
3The order stated, “The defendants’ motion to stay the action and com-
pel arbitration is granted. The action is stayed pending completion of arbi-
tration and shall be administratively closed.”
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A
The Federal Arbitration Act (“FAA”) “represents Con-
gress’s intent to move the parties to an arbitrable dispute out
of court and into arbitration as quickly and easily as possible.”
Bushley v. Credit Suisse First Boston, 360 F.3d 1149, 1153
(9th Cir. 2004) (internal quotation marks omitted); see also
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 23 (1983) (referring to the FAA’s “statutory policy of
rapid and unobstructed enforcement of arbitration agree-
ments”). Because the FAA “endeavor[s] to . . . limit appeals
from orders directing arbitration,” Bushley, 360 F.3d at 1153
(internal quotation marks omitted; first alteration in original),
a litigant may not appeal a district court’s interlocutory order
staying judicial proceedings or compelling parties to arbitrate
a dispute, see 9 U.S.C. § 16(b)(1)-(2).4 Notwithstanding the
fact that the trial court stayed the action and compelled arbi-
tration, Dees contends that we possess jurisdiction to hear this
appeal under 9 U.S.C. § 16(a)(3), which provides that an “ap-
peal may be taken from a final decision with respect to an
arbitration.”
[1] The Supreme Court has recently construed this section
of the FAA. In Green Tree Financial Corp.-Alabama v. Ran-
dolph, 531 U.S. 79 (2000), the Court held that a “final deci-
sion” under 9 U.S.C. § 16(a)(3) is one that “ends the litigation
on the merits and leaves nothing more for the court to do but
4This section of the FAA states:
Except as otherwise provided in section 1292(b) of title 28, an
appeal may not be taken from an interlocutory order—
(1) granting a stay of any action under section 3 of this
title;
(2) directing arbitration to proceed under section 4 of this
title;
. . . .
9 U.S.C. § 16(b)(1)-(2).
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execute the judgment.” Id. at 86 (internal quotation marks
omitted). Pursuant to that definition, the Court held that
appellate jurisdiction existed upon filing of a notice of appeal
where a district court had granted a motion to compel arbitra-
tion and dismissed the action with prejudice. Id. The Court
reasoned that the order “disposed of the entire case on the
merits and left no part of it pending before” the district court.
Id. The Court observed, 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.
In Bushley v. Credit Suisse First Boston, 360 F.3d at 1153,
we relied upon Green Tree to hold that appellate jurisdiction
was absent in an appeal from an order in which the district
court compelled arbitration of the plaintiff’s claims but did
not rule upon the defendant’s motions to stay and to dismiss.
We held that the plaintiff’s action was “effectively stayed
pending the conclusion” of the arbitration and that the “dis-
trict court’s order therefore is not final and appealable under
§ 16(a)(3).” Id.; see also id. at 1153 n.1 (“Courts should be
aware that a dismissal renders an order appealable under
§ 16(a)(3), while the granting of a stay is an unappealable
interlocutory order . . . .” (internal quotation marks omitted)).
Bushley can be contrasted with Interactive Flight Technolo-
gies, Inc. v. Swissair Swiss Air Transport Co., 249 F.3d 1177,
1179 (9th Cir. 2001), where we held that a district court order
compelling arbitration and dismissing the action without prej-
udice was an appealable final decision.
B
Unlike in Green Tree and Interactive Flight Technologies
—where the district courts’ orders were held to be immedi-
ately appealable—the trial court here did not dismiss Dees’s
medical malpractice claim. Rather, as in Bushley—where we
held that appellate jurisdiction was absent—the trial court
stayed the action and compelled arbitration. In an effort to
evade the seemingly inescapable implications of this prece-
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dent, Dees contends that this order is nevertheless appealable
because the trial court also directed that the case be admin-
istratively closed. Dees argues that such an order is the equiv-
alent of a dismissal.
To support his expansive understanding of an administra-
tive closing’s implications, Dees relies primarily upon Ameri-
can Heritage Life Insurance Co. v. Orr. 294 F.3d 702 (5th
Cir. 2002). There, commercial lenders that had been sued by
consumers in state court filed a separate action in federal dis-
trict court seeking an order compelling arbitration of the state
court proceedings. Id. at 706. The district court issued an
order that compelled arbitration and closed the case without
dismissing it. Id. at 706-07. The Fifth Circuit held that this
order was immediately appealable because there was “no
practical distinction between ‘dismiss’ and ‘close’ for pur-
poses of this appeal.” Id. at 708. Because the only relief
sought by the commercial lenders was an order compelling
arbitration and staying the state court proceedings, the district
court had nothing left to do but execute the judgment. Id. The
decision was therefore final for purposes of § 16(a)(3). See id.
(“where a district court with nothing before it but whether to
compel arbitration and stay state court proceedings issues an
order compelling arbitration, staying the underlying state
court proceedings, and closing the case, thereby effectively
ending the entire matter on its merits and leaving nothing
more for the district court to do but execute the judgment,
appellate jurisdiction lies, as the decision is ‘final’ within the
contemplation of § 16(a)(3) of the FAA”); see also Green
Tree Fin. Corp.-Ala., 531 U.S. at 86 (a final decision is one
that “leaves nothing more for the court to do but execute the
judgment” (internal quotation marks omitted)).
Dees’s reliance upon American Heritage is misplaced.
Unlike the district court in that case, the trial court here had
more before it than simply the issue of arbitrability. While the
plaintiff in American Heritage sought only to obtain an order
compelling arbitration, Dees initiated this suit to recover dam-
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ages for medical malpractice, and that claim—although cur-
rently stayed—remains before the trial court.
Indeed, Judge Dennis’s American Heritage concurrence
clarifies that the court’s appellate jurisdiction derived not
from the fact that the district court had closed the case but
from the fact that the district court had entered a final decision
by compelling arbitration in an action brought solely for that
purpose. See Am. Heritage Life Ins. Co., 294 F.3d at 716
(Dennis, J., concurring). Judge Dennis emphasized that “[i]n
proceedings where the litigants place more than the issue of
arbitrability before the district court, an order compelling
arbitration and closing the case is not equivalent to a final
judgment of dismissal.” Id. at 715 n.9; see also id. at 715
(“the administrative closure . . . has no jurisdictional signifi-
cance”).
[2] Judge Dennis’s understanding of the American Heritage
holding has been borne out by later Fifth Circuit decisions
that unambiguously conclude that an administrative closing
does not create appellate jurisdiction. In South Louisiana
Cement, Inc. v. Van Aalst Bulk Handling, B.V., 383 F.3d 297,
302 (5th Cir. 2004), the Fifth Circuit held that it lacked appel-
late jurisdiction in a case that is procedurally identical to
Dees’s appeal. There, the district court issued an order com-
pelling arbitration, staying the litigation, and administratively
closing the case. Id. at 299-300. The Fifth Circuit held that an
“arbitration order entering a stay, as opposed to a dismissal,
is not an appealable final order,” and explained that “admin-
istratively closing a case is not a dismissal or final decision.”
Id. at 300, 302.
The same result inured in Mire v. Full Spectrum Lending
Inc., where the Fifth Circuit again concluded that it lacked
appellate jurisdiction over a district court order that stayed
proceedings pending arbitration and administratively closed
the case. 389 F.3d 163, 167 (5th Cir. 2004). The court empha-
sized that the “effect of an administrative closure is no differ-
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ent from a simple stay, except that it affects the count of
active cases pending on the court’s docket; i.e., administra-
tively closed cases are not counted as active. . . . That situa-
tion is the functional equivalent of a stay, not a dismissal, and
is thus not an appealable order under the FAA.” Id.
C
[3] Although we have yet to address the jurisdictional
effects of a district court order administratively closing a case,
those circuits that have confronted the issue have unani-
mously echoed the Fifth Circuit’s conclusion that an adminis-
trative closing has no jurisdictional effect. In ATAC Corp. v.
Arthur Treacher’s, Inc., 280 F.3d 1091, 1099 (6th Cir. 2002),
for example, the Sixth Circuit held that it lacked appellate
jurisdiction to review a district court order that stayed judicial
proceedings pending arbitration and that directed closure of
the case. See also Penn West Assocs., Inc. v. Cohen, 371 F.3d
118, 128 (3d Cir. 2004) (“an order merely directing that a
case be marked closed constitutes an administrative closing
that has no legal consequence other than to remove that case
from the district court’s active docket”); Lehman v. Revolu-
tion Portfolio LLC, 166 F.3d 389, 392 (1st Cir. 1999) (“an
administrative closing has no effect other than to remove a
case from the court’s active docket and permit the transfer of
records associated with the case to an appropriate storage
repository”); Fla. Ass’n for Retarded Citizens, Inc. v. Bush,
246 F.3d 1296, 1298 (11th Cir. 2001) (per curiam) (endorsing
the Lehman court’s definition of an administrative closing).
[4] We see no reason to depart from this substantial body
of persuasive precedent. We therefore hold that a district court
order staying judicial proceedings and compelling arbitration
is not appealable even if accompanied by an administrative
closing. An order administratively closing a case is a docket
management tool that has no jurisdictional effect. This con-
clusion comports with the results reached by our sister circuits
and with the Supreme Court’s observation in Green Tree that
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it would have lacked appellate jurisdiction if the “District
Court [had] entered a stay instead of a dismissal.” Green Tree
Fin. Corp.-Ala., 531 U.S. at 87 n.2.
[5] Because the district court did not issue “a final decision
with respect to an arbitration,” 9 U.S.C. § 16(a)(3), we are
without jurisdiction to review this interlocutory order.
DISMISSED.
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