 Vulcan Chemical Technologies, Incorporated; Vulcan Materials Company v. Hart- well, III, Darryl S. Lew, Geremy Kamens, HUNTON & WILLIAMS, Richmond, Virginia

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 VULCAN CHEMICAL TECHNOLOGIES,
INCORPORATED; VULCAN MATERIALS
COMPANY,
Plaintiffs-Appellees,
No. 01-1943 v.
PHILLIP J. BARKER, individually and
d/b/a Sabra Asia,
Defendant-Appellant. 
Appeal from the United States District Court
for the Western District of Virginia, at Big Stone Gap.
Glen M. Williams, Senior District Judge.
(CA-01-33-2)
Argued: February 27, 2002
Decided: May 21, 2002
Before NIEMEYER and LUTTIG, Circuit Judges, and
Henry M. HERLONG, Jr., United States District Judge
for the District of South Carolina, sitting by designation.
Vacated and remanded by published opinion. Judge Niemeyer wrote
the opinion, in which Judge Luttig joined. Judge Herlong wrote an
opinion concurring in the result.
COUNSEL
ARGUED: Franklin Murry Tatum, III, WRIGHT, ROBINSON,
OSTHIMER & TATUM, Richmond, Virginia, for Appellant. Anton

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Henry Gaede, Jr., BRADLEY, ARANT, ROSE & WHITE, L.L.P.,
Birmingham, Alabama, for Appellees. ON BRIEF: Mark S. Yacano,
WRIGHT, ROBINSON, OSTHIMER & TATUM, Richmond, Vir-
ginia; Hartley Thorson Hansen, Kevin Robert Culhane, HANSEN,
BOYD, CULHANE & WATSON, Sacramento, California; Stephen
McQuiston Hodges, PENNSTUART, Abingdon, Virginia, for Appel-
lant. Jeffrey M. Anderson, BRADLEY, ARANT, ROSE & WHITE,
L.L.P., Birmingham, Alabama; Thomas G. Slater, Jr., Ray V. Hart-
well, III, Darryl S. Lew, Geremy Kamens, HUNTON & WILLIAMS,
Richmond, Virginia; William B. Poff, Frank K. Friedman, R. Lucas
Hobbs, WOODS, ROGERS & HAZLEGROVE, Roanoke, Virginia,
for Appellees.
OPINION
NIEMEYER, Circuit Judge:
We are presented with the question of whether this action should
have proceeded to hearing and judgment in the face of an earlier state
court judgment that involved the same parties and issues but was sub-
ject to appeal.
When Vulcan Chemical Technologies, Inc., terminated Phillip
Barker’s chemical-products Distribution Agreement, Barker sued the
company and its parent, Vulcan Materials Company, (collectively,
"Vulcan") in California state court for breach of contract and related
claims. Consistent with the Distribution Agreement, Vulcan filed a
motion to compel arbitration under the California Arbitration Act, and
the state court granted the motion, staying further proceedings until
completion of the arbitration. After the arbitrator ruled in favor of
Barker, awarding him $21 million in damages, Vulcan filed this
action in the Western District of Virginia to vacate the arbitration
award, invoking the Federal Arbitration Act. Shortly thereafter, the
California state court entered a judgment granting Barker’s motion to
confirm the arbitration award and denying Vulcan’s motion to vacate
it, a judgment that Vulcan appealed. Two months later, however, the
district court vacated the very award that had been confirmed by the
California court, remanding the issue of damages to the arbitrator "for
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a determination not inconsistent with this opinion." On appeal, Barker
contends that the district court acted without jurisdiction or, alterna-
tively, should have abstained.
We conclude that, because Vulcan filed a motion to arbitrate in
California under the California Arbitration Act and a California court
has confirmed the arbitration award — albeit in a judgment subject
to appeal — the district court should have abstained from hearing and
deciding this case. Accordingly, we vacate the district court’s judg-
ment and remand with instructions to dismiss this action.
I
Phillip Barker was one of the founders of Rio Linda Chemical
Company, a Sacramento, California corporation which developed
sodium chlorite and chlorine dioxide chemicals as biocides for vege-
tables and water treatment. In 1989, Albright and Wilson Americas,
Inc., a Richmond, Virginia subsidiary of Tenneco Corporation, pur-
chased the stock of Rio Linda. At the same time, Rio Linda entered
into a consulting agreement with Barker that gave Barker the option,
upon payment of a sum equal to 800% of after-tax profits, to become
the exclusive distributor of sodium chlorite/chlorine dioxide chemi-
cals in the Far East.
By 1994, Rio Linda’s financial condition had deteriorated to the
point that the company had a negative net worth. Around that time,
Barker exercised his option to purchase the rights to distribute speci-
fied products in four countries in the Far East and, pursuant to the pre-
established formula, paid the price of $32,888. (If Barker had
exercised his option in 1989, he would have been required to pay
approximately $5.2 million.) These distribution rights were memorial-
ized in a Distribution Agreement between Rio Linda and Barker dated
March 1, 1995.
Under the Distribution Agreement, Rio Linda appointed Barker the
exclusive distributor of several Rio Linda chemical products for
Japan, South Korea, Taiwan, and China. In section B.1. of the Distri-
bution Agreement, Barker agreed (1) to "use his best efforts" in pro-
moting and selling the products, (2) to "develop fully the market," and
(3) to purchase all of his requirements of these chemical products for
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the specified territory from Rio Linda. The Distribution Agreement
was to be governed by the law of Virginia. Finally, the parties agreed
to settle any "dispute or claim arising out of or relating to this Agree-
ment" by arbitration. The arbitration clause provided:
The arbitration shall take place in Sacramento, California,
[where both Rio Linda and Barker were located] or another
mutually acceptable California location and will be final and
binding. . . . Judgment upon an award, including any interim
award, rendered by the arbitrator may be entered in any
Court having jurisdiction over the parties. The arbitrator
may determine all questions of law and jurisdiction govern-
ing the arbitration, including questions as to whether the dis-
pute is arbitrable. The arbitrator has the right to grant
interim or permanent relief, including equitable relief, and
shall have the discretion to award costs including reasonable
legal fees, interest and costs of arbitration.
In mid-1995, Albright and Wilson sold Rio Linda for $12.9 million
to Vulcan Materials Company, a New Jersey corporation head-
quartered in Alabama. Vulcan Materials changed Rio Linda’s name
to Vulcan Chemical Technologies ("Vulcan Chem-Tech"), but Vulcan
Chem-Tech remained headquartered in Sacramento, California.
Barker has alleged that, from the time Vulcan Materials acquired Rio
Linda, he detected "a concerted effort to prevent [him] from succeed-
ing in the Asian market." He alleged that Vulcan Materials and Vul-
can Chem-Tech "disparag[ed] Barker in the marketplace, ignor[ed]
his exclusive rights and fail[ed] to make products available to him to
sell." Ultimately, in March 1999, Vulcan Chem-Tech terminated
Barker’s exclusive distributorship, claiming that Barker had failed to
"perform [his] obligations under the [distribution] agreement."
Although the letter of termination referred to Barker’s duties imposed
by section B.1. of the Distribution Agreement (to "use best efforts"
in promoting products, to "develop fully the market" for the products,
and to purchase 100% of its requirements for the market from Rio
Linda), the letter referred to no specific failures to fulfill those duties.
Shortly after receiving Vulcan Chem-Tech’s letter of termination,
Barker commenced an action against Vulcan Materials and Vulcan
Chem-Tech in the Superior Court of California for the County of Sac-
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ramento, alleging breach of contract, violation of California’s Unfair
Practices Act, and related torts. Barker joined Vulcan Materials as a
defendant on the allegation that Vulcan Materials was Vulcan Chem-
Tech’s alter ego. Relying on the arbitration clause in the Distribution
Agreement and on the California Arbitration Act, both Vulcan Mate-
rials and Vulcan Chem-Tech moved to compel arbitration. When
Barker resisted the motion, arguing in part that Vulcan Materials was
not a party to the arbitration agreement, Vulcan Materials agreed to
participate in the arbitration and to be bound by the arbitrator’s deci-
sion. Explicitly relying on that agreement, the California Superior
Court then granted Vulcan’s motion to compel arbitration and stayed
court proceedings "pending completion of arbitration." Vulcan nomi-
nated a former state judge to be the arbitrator, and Barker agreed.
The arbitration lasted 26 days, during which the parties presented
the testimony of 22 witnesses and introduced 1,000 exhibits totaling
29,000 pages. Applying Virginia law, the arbitrator concluded that the
evidence did not support Vulcan’s claim that Barker failed to perform
his responsibilities under the Distribution Agreement and that Vulcan
Chem-Tech had no cause to terminate the Distribution Agreement.
The arbitrator found further that the Vulcan companies "failed to ful-
fill their obligations under the Agreement" and to support Barker in
his efforts. In addition, the arbitrator found that Vulcan "breached the
covenant of good faith and fair dealing implied in every contract."
Relying on the methodology proposed by Barker’s expert witness, the
arbitrator calculated compensatory damages, taking into account
Barker’s lost profits, and rendered an award of $21,128,000. In addi-
tion, the arbitrator awarded Barker costs and attorneys fees and
ordered Vulcan to pay the arbitrator’s costs and fees. The award was
entered on March 21, 2001.
Within two days, Vulcan commenced this action to vacate the arbi-
tration award under Section 10 of the Federal Arbitration Act in the
Western District of Virginia, Big Stone Gap Division. Vulcan relied
on diversity jurisdiction, as Vulcan Chem-Tech had by then relocated
to Alabama, creating complete diversity between Barker and Vulcan.
During the same period, Barker, after waiting the 15-day period
required by California law, filed a motion in the California Superior
Court to confirm the arbitration award. The parties then responded to
each other’s actions. Vulcan filed a motion in the California Superior
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Court to vacate the arbitration award, again relying on Section 10 of
the Federal Arbitration Act, and Barker filed a motion in this action
to stay, abstain, or dismiss. The district court not only denied Barker’s
motion to stay, abstain, or dismiss but enjoined Barker from pursuing
the California litigation. After this court reversed that injunction, the
Superior Court of California confirmed the arbitration award on June
1, 2001. Vulcan appealed that decision, which is currently pending.
Two months later, the district court in this case rejected Barker’s
jurisdictional challenges and vacated the arbitration award, remanding
the matter to the arbitrator for a determination of damages in accor-
dance with the district court’s conclusions. On appeal, Barker chal-
lenges the district court’s jurisdiction and, alternatively, its refusal to
abstain.
II
Barker contends first that the district court lacked jurisdiction to
hear Vulcan’s complaint for two reasons. First, Barker maintains that
this action is not "an independent original proceeding but ancillary to
and part of Barker’s [original] Superior Court suit filed in April
1999." As such, he argues that, because the parties were not of diverse
citizenship when the California case commenced, Vulcan Chem-
Tech’s subsequent relocation to Alabama cannot be relied on to create
complete diversity of citizenship.
Vulcan does not dispute that the Superior Court of California had
jurisdiction to compel arbitration and that the California court
retained jurisdiction pending arbitration. Nor does it deny that the
California court had jurisdiction to deny its motion to vacate the arbi-
tration award and to grant Barker’s motion to confirm the award.
Rather, it maintains that this action, commenced under Section 10 of
the Federal Arbitration Act, 9 U.S.C. § 10, to vacate the award is a
distinct claim which it is entitled to pursue by virtue of the authoriza-
tion conferred by the Federal Arbitration Act and diversity jurisdic-
tion under 28 U.S.C. § 1332.
We agree with Vulcan that this action is an independent action
authorized by the Federal Arbitration Act, with jurisdiction conferred
by 28 U.S.C. § 1332. Section 10 of the Act creates a separate cause
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of action to vacate an arbitration award under certain limited circum-
stances. 9 U.S.C. § 10; see also Cortez Byrd Chips, Inc. v. Bill Har-
bert Constr. Co., 529 U.S. 193, 197-204 (2000) (recognizing that § 10
motions begin a separate proceeding and that venue is not limited to
the district of the arbitration). The Section 10 cause of action is inde-
pendent of any action that may have been filed to compel arbitration.
Cf. Green Tree Fin. Corp. - Ala. v. Randolph, 531 U.S. 79, 86 (2000)
("The FAA . . . permit[s] parties to arbitration agreements to bring a
separate proceeding in a district court to enter judgment on an arbitra-
tion award once it is made (or to vacate or modify it) . . . ."). In addi-
tion, at the time this Section 10 action was commenced, the parties
were of diverse citizenship, giving the district court jurisdiction.
Accordingly, we reject Barker’s jurisdictional challenge based on the
contention that this case is a continuation of the California case. See
Johnson v. DeGrandy, 512 U.S. 997, 1005 (1994) (noting that "plain-
tiffs are free to litigate in any court with jurisdiction").
Barker also argues in challenge of jurisdiction that, under the
Rooker-Feldman doctrine,1 "any subject matter jurisdiction that the
district court may have had was lost when the Superior Court [in Cali-
fornia] entered judgment on the identical substantive issues involving
the same parties." Barker argues that the district court, "by ruling on
Vulcan’s petition to vacate [the arbitration award] after the Superior
Court ruled in favor of Barker on the same substantive issues . . . sat
in judgment of the Superior Court and effectively impaired that
court’s ability to bring a case that had been pending on its docket for
two years to a logical and dignified end." At bottom, Barker asserts
that the district court’s "refusal to dismiss Vulcan’s petition to vacate
creates the potential for a train wreck between the California state
court and the federal courts."
Barker’s position illuminates the tension between maintaining a
dual system, wherein parallel actions may proceed to judgment until
one becomes preclusive of the other, and the need to avoid federal
lower-court review of state cases. However, because we conclude, as
1The doctrine is stated as follows: "a United States District Court has
no authority to review final judgments of a state court in judicial pro-
ceedings." D.C. Court of Appeals v. Feldman, 460 U.S. 462, 482 (1983);
see also Rooker v. Fid. Trust Co., 263 U.S. 413 (1923).
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we explain below, that Vulcan’s agreement to submit to the jurisdic-
tion of the California state courts should preclude federal oversight of
the arbitration, and, moreover, that the district court should have
abstained under the Colorado River doctrine, we do not reach Bark-
er’s Rooker-Feldman argument.2
III
In the Distribution Agreement, Vulcan Chem-Tech (at the time,
Rio Linda) agreed to submit any dispute arising under the Agreement
to "final and binding" arbitration in Sacramento, California. And
when the dispute arose about whether Vulcan Chem-Tech properly
terminated the Distribution Agreement, Vulcan Chem-Tech justifi-
ably filed a motion under the California Arbitration Act to compel
arbitration. Its determined election to resolve the dispute through arbi-
tration in California is underscored by the agreement of its parent,
Vulcan Materials, to submit to binding arbitration the question of
whether it was Vulcan Chem-Tech’s alter ego. Under this process
invoked by Vulcan, the Superior Court of California granted Vulcan
Chem-Tech’s motion to compel arbitration and stayed further pro-
ceedings until the arbitration was completed.
Moreover, under the California Arbitration Act, "[t]he making of
an agreement . . . providing for arbitration to be had within [Califor-
nia] [is] deemed a consent of the parties thereto to the jurisdiction of
2Our concurring colleague would reach the Rooker-Feldman issue and
decide the case under that doctrine, concluding that its application is
jurisdictional in this case. But this approach fails to recognize the fact
that the district court in Virginia obtained jurisdiction over Vulcan’s Sec-
tion 10 claim before the California court did. It would be a novel applica-
tion of the already beleaguered Rooker-Feldman doctrine to divest a
federal court of subject matter jurisdiction simply because a parallel case
was later filed in State court seeking to decide the same question. See
generally Thomas D. Rowe, Jr., Rooker-Feldman: Worth Only the Pow-
der to Blow It Up?, 74 Notre Dame Law Review 1081 (1999) (forward
to Symposium, The Rooker-Feldman Doctrine, noting general agreement
with the notion that Rooker-Feldman does not make a significant "differ-
ence beyond the effects of other limits on federal courts’ exercise of their
powers" and that there is a "proliferation of lower case law with many
different emphases and some highly questionable decisions").
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the courts of [California] to enforce such agreement by the making of
any orders provided for in [the California Arbitration Act] and by
entering of judgment on an award under the agreement." Cal. Civ.
Code § 1293. Accordingly, when Vulcan moved the California court
to compel arbitration in California, not only did it elect to use a Cali-
fornia forum for the arbitration, it also inherently agreed to use the
California state court system as its forum for sorting out the effect of
the arbitration. Vulcan thereafter willingly engaged in a full arbitra-
tion proceeding, without objection to the order compelling arbitration
or to its location. Having elected, enforced, and implemented the arbi-
tration clause in California, Vulcan should not be permitted to renege
on its agreements now that it has lost in that proceeding.
Vulcan’s agreement to arbitrate in California under the supervision
of the California state courts is consistent with the language of the
Distribution Agreement, which selected a California forum for resolv-
ing disputes. Courts routinely enforce such forum-selection clauses.
See, e.g., The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972)
(holding that forum selection clauses in international contracts are
prima facie valid); see also Stewart Org., Inc. v. Ricoh Corp., 487
U.S. 22, 33 (1988) (Kennedy, J., concurring) (stating that The Bre-
men’s "reasoning applies with much force to federal courts sitting in
diversity"); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14
(1985) (noting that forum-selection provisions do not inherently
offend due process); Bryant Elec. Co., Inc. v. City of Fredericksburg,
762 F.2d 1192, 1195 (4th Cir. 1985) (applying The Bremen rule in a
domestic commercial case); Mercury Coal & Coke, Inc. v. Mannes-
mann Pipe & Steel Corp., 696 F.2d 315, 317 (4th Cir. 1982) (recog-
nizing the parties’ right to "agree in advance to submit controversies
arising out of their contract to the jurisdiction of a given court"). This
freedom to choose a forum is also recognized under Virginia law,
which the parties chose to use in resolving disputes under the Distri-
bution Agreement. See Paul Bus. Sys., Inc. v. Canon U.S.A., Inc., 397
S.E.2d 804, 807 (Va. 1990) (embracing "the modern view" that
choice of forum clauses are "prima facie valid"). Thus, absent a show-
ing that the chosen forum is unreasonable or was imposed by fraud
or unequal bargaining power, the parties’ choice should be enforced.
The Bremen, 407 U.S. at 10; Mercury Coal, 696 F.2d at 317; Paul,
397 S.E.2d at 807.
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Enforcing the parties’ agreement to a California arbitration under
the supervision of the California court system is also consistent with
the Federal Arbitration Act’s primary purpose of "ensuring that pri-
vate agreements to arbitrate are enforced according to their terms."
Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Jr.
Univ., 489 U.S. 468, 479 (1989). In Volt, one party to an arbitration
agreement sought to employ the Federal Arbitration Act to the exclu-
sion of the California Arbitration Act, suggesting that the federal act
preempted the state act. The Supreme Court rejected the argument in
deference to the state proceedings, stating:
[I]t does not follow that the FAA [Federal Arbitration Act]
prevents the enforcement of agreements to arbitrate under
different rules than those set forth in the Act itself. Indeed,
such a result would be quite inimical to the FAA’s primary
purpose of ensuring that private agreements to arbitrate are
enforced according to their terms. Arbitration under the Act
is a matter of consent, not coercion, and parties are generally
free to structure their arbitration agreements as they see fit.
. . . Where, as here, the parties have agreed to abide by state
rules of arbitration, enforcing those rules according to the
terms of the agreement is fully consistent with the goals of
the FAA, even if the result is that arbitration is stayed where
the Act would otherwise permit it to go forward. By permit-
ting the courts to "rigorously enforce" such agreements
according to their terms . . . we give effect to the contractual
rights and expectations of the parties, without doing vio-
lence to the policies behind the FAA.
Id. (emphasis added).
Because Vulcan agreed to binding arbitration in California and
willingly initiated enforcement of its agreement under the supervision
of the California state courts, we now conclude that the district court
erred in not enforcing Vulcan’s election to pursue that course, not
only as a matter of enforcing a forum-selection clause, but also as a
matter of holding Vulcan to its election at that time not to pursue an
independent federal claim under the Federal Arbitration Act.
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IV
In addition, because of the peculiar circumstances of this case, the
district court should have abstained under the Colorado River doc-
trine.
It is true, as a general rule, that our dual system of federal and state
governments allows parallel actions to proceed to judgment until one
becomes preclusive of the other. "Despite what may appear to result
in a duplication of judicial resources, ‘[t]he rule is well recognized
that the pendency of an action in the state court is no bar to proceed-
ings concerning the same matter in the Federal court having jurisdic-
tion.’" McLaughlin v. United Virginia Bank, 955 F.2d 930, 934 (4th
Cir. 1992) (quoting McClellan v. Carland, 217 U.S. 268, 282 (1910)).
Moreover, as a general rule, federal courts are bound by a "virtually
unflagging obligation . . . to exercise the jurisdiction given them."
Colorado River Water Conservation Dist. v. United States, 424 U.S.
800, 817 (1976). However, when two competing parallel actions seek
to apply the same law in deciding whether to enforce or vacate the
same arbitration award, maintaining a harmonious relationship
between the states and the federal government requires consideration
of more complex principles than mere principles of duality.
Under the principles of Colorado River, federal courts may abstain
from exercising their jurisdiction in the exceptional circumstances
where a federal case duplicates contemporaneous state proceedings
and "[w]ise judicial administration, giving regard to conservation of
judicial resources and comprehensive disposition of litigation" clearly
favors abstention, id. (quoting Kerotest Mfg. Co. v. C-O-Two Fire
Equip. Co., 342 U.S. 180, 183 (1952)); see also Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 15 (1983);
McLaughlin, 955 F.2d at 935. Vulcan’s request for a federal court to
vacate an arbitration award that a California state court had confirmed
in an earlier judgment after considering the same evidence and argu-
ments presents such extraordinary circumstances. We are thus led to
consider, as a matter of wise judicial administration, whether the dis-
trict court should have dismissed the federal claim in deference to the
California state proceedings or whether it was correct in exercising its
jurisdiction to decide the federal claim.
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The decision whether to abstain necessarily requires resolving the
tension between the federal court’s obligation to exercise jurisdiction
and the "combination of factors counselling against that exercise."
Colorado River, 424 U.S. at 818-19. Although the prescribed analysis
is not a "hard-and-fast" one in which application of a "checklist" dic-
tates the outcome, six factors have been identified to guide the analy-
sis for Colorado River abstention: (1) whether the subject matter of
the litigation involves property where the first court may assume
jurisdiction to the exclusion of others; (2) whether the federal forum
is an inconvenient one; (3) the desirability of avoiding piecemeal liti-
gation; (4) the relevant order in which the courts obtained jurisdiction
and the progress achieved in each action; (5) whether state law or fed-
eral law provides the rule of decision on the merits; and (6) the ade-
quacy of the state proceeding to protect the parties’ rights. Moses H.
Cone, 460 U.S. at 15, 19-27; Colorado River, 424 U.S. at 818-19;
McLaughlin, 955 F.2d at 934-35. At bottom, abstention should be the
exception, not the rule, and it may be granted only when "the parallel
state-court litigation will be an adequate vehicle for the complete and
prompt resolution of the issues between the parties." Moses H. Cone,
460 U.S. at 28.
Because any decision to abstain falls within a district court’s dis-
cretion, we review the decision for abuse of discretion. Al-Abood v.
El-Shamari, 217 F.3d 225, 232 (4th Cir. 2000). Our review is guided
by the six Colorado River abstention factors.
Under the first factor, while the California court did not have juris-
diction over property that could permit it to exclude the federal court
from considering the matter, it nevertheless had jurisdiction over the
arbitration award to the same extent that the state court in Colorado
River had jurisdiction over water rights. Moreover, just as in Colo-
rado River, the California court’s jurisdiction in this case created a
potentiality for conflicting decisions regarding the arbitration award,
a potentiality of which Vulcan was completely aware. In these cir-
cumstances, the first Colorado River factor is applied to favor absten-
tion. See Colorado River, 424 U.S. at 819 (noting the confusion that
would arise if there were conflicting decisions regarding water rights).
Under the second factor, the inconvenience of the federal forum in
this case also supports abstention in favor of the California state court.
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The parties to the arbitration agreement were located in the Sacra-
mento, California area, and they had agreed, in the arbitration agree-
ment, to conduct any necessary arbitration in Sacramento. Most of the
witnesses were from that area, and the arbitration in fact was con-
ducted in California. Moreover, at the time the action was com-
menced in the district court, the action in California had been pending
there for almost two years. Vulcan has offered no explanation, other
than the parties’ agreement in the Distribution Agreement that Vir-
ginia courts could have personal jurisdiction over them, for why it
would be convenient now to move the case from California to the
Western District of Virginia, Big Stone Gap Division. No other nexus
between Vulcan and that forum has been suggested.
Under the third factor, while the threat of piecemeal litigation was
not overwhelming, it still lurked as a possibility if the district court
exercised federal jurisdiction. In fact, as it turned out, the district
court’s ruling would bring about piecemeal decisionmaking. It
vacated the arbitration award and concluded that the arbitration award
would not be enforceable against Vulcan Materials as the alter ego of
Vulcan Chem-Tech. While the district court purported to rule on the
merits of alter-ego liability, it was not authorized to make that ruling
on a petition to vacate an arbitration award. Rather, the district court’s
decision to relieve Vulcan Materials from the arbitration award would
necessitate litigating the alter-ego issue in the California state court
where alter-ego liability was originally alleged by Barker. At the
same time, the arbitration would have to continue against Vulcan
Chem-Tech before the arbitrator on the question of damages. The
state court litigation would be appealed through the appellate courts
of California, while the arbitration decision would again be reviewed
by the district court in Virginia. Continuing federal jurisdiction thus
meant that the parties would have to look to two forums for resolution
of the dispute. Indeed, the district court recognized this potential for
piecemeal litigation when it enjoined Barker from litigating in Cali-
fornia — an injunction that we earlier reversed. While there may be
cases in which piecemeal litigation is appropriate or necessary to
enforce the Federal Arbitration Act, see, e.g., Dean Witter Reynolds,
Inc. v. Byrd, 470 U.S. 213, 221 (1985), in this case the California
court eliminated any such possibility by diligently enforcing the par-
ties’ agreement to arbitrate. This factor therefore favors abstention.
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Under the fourth factor, the order in which the courts took jurisdic-
tion and the progress of the litigation also favors abstention. The suit
in the Superior Court of California was filed in April 1999, and that
court ordered the parties to arbitration, on Vulcan’s motion, in
December 1999. In ordering arbitration, the Superior Court retained
jurisdiction, staying further proceedings until completion of the arbi-
tration. After the arbitration award was rendered on March 21, 2001,
and after the mandatory 15-day waiting period, Barker filed a motion
to confirm the award. Although Vulcan’s federal action was com-
menced before the motion to confirm was filed in the California court,
the California action was first-filed, having been filed in April 1999.
Moreover, by the time the district court heard oral argument on the
motion to vacate, the California court had already entered a final
judgment confirming the award and denying Vulcan’s motion to
vacate. "[P]riority should not be measured exclusively by which com-
plaint was filed first, but rather in terms of how much progress has
been made in the two actions." Moses H. Cone, 460 U.S. at 21. In this
case, not only was the California case first-filed, it progressed to judg-
ment first. Accordingly, the fourth factor weighs in favor of absten-
tion.
Under the fifth factor, the rule of decision is not material. Although
Vulcan seeks relief under the Federal Arbitration Act, California
courts have concurrent jurisdiction over the claim, making the rule of
decision less significant. Nakash v. Marciano, 882 F.2d 1411, 1416
(9th Cir. 1989). In fact, the California state court has already heard
Vulcan’s Section 10 claim and denied it. Vulcan has appealed the
denial to the California Court of Appeals. In addition, both forums
would apply the substantive law of Virginia as provided in the Distri-
bution Agreement.
Under the final factor, there is no evidence to suggest that the Cali-
fornia state courts are somehow inadequate to protect the parties’
rights under the arbitration agreement. Both the Federal Arbitration
Act and the California Arbitration Act seek to enforce arbitration
agreements only as contractual matters, according to the terms of the
contract. In addition, both acts provide similar grounds for vacating
an arbitration award. Compare Cal. Civ. Code § 1286.2 with 9 U.S.C.
§ 10. Because both courts apply the same law and policy, this factor
also favors abstention.
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Notwithstanding our analysis of the six Colorado River abstention
factors, it is important to note that a factor-by-factor analysis does not
fully convey the synergistic effect of all the circumstances. This case
was gladly litigated by both parties in California and gladly arbitrated
there before an agreed-upon arbitrator. Under California law, the par-
ties, by so partaking, agreed that the arbitration award would be
supervised by the California courts. And the California Superior
Court confirmed the arbitration award in a final judgment that is now
the subject of appeal. Not only was the California court presented
with all of the parties’ positions — both for and against confirmation
— it was presented with the arguments under both the California and
Federal Arbitration Acts.
When Vulcan lost the arbitration and was ordered to pay a large
award, it undertook a strategy to obtain a second opinion on the same
issue from the district court. This strategy effectively sought to bypass
the procedure that Vulcan had elected to follow, as well as to preempt
or, if necessary, to reverse the state court that it had earlier employed
in the matter.
To validate this strategy would undermine several traditionally val-
ued tenets of wise judicial administration. The judicial system prom-
ises one trial, and, by enforcing doctrines of res judicata, collateral
estoppel, and full faith and credit, seeks to prohibit relitigating the
same issues when the first trial was fair. Moreover, in our dual system
of government, again through full faith and credit, the Rooker-
Feldman doctrine, the Erie doctrine, abstention, and other similar
doctrines, respect is given by both state and federal governments to
the courts of the other. At bottom, the federal-state system of courts
seeks, in a cooperative effort, to give one fair trial on a given dispute,
to respect each other, and thus to administer justice efficiently.
This case presents a risk of undermining these tenets on at least two
fronts. We have found that Vulcan violated its agreement to arbitra-
tion and corresponding litigation in California, and that its efforts to
circumvent that agreement, especially with the progress made by the
California Superior Court, calls loudly for the application of Colorado
River abstention.
By failing to abstain and thereby relieve the unseemly tension
between federal and state courts, we conclude that the district court
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abused its discretion. In reaching this conclusion, however, we stress
the unusual circumstances of this case, in which a state court had
entered judgment on the exact issue to be considered by the federal
court before the federal court had even heard argument in the case.
Accordingly, we vacate the judgment of the district court and
remand with instructions to dismiss this action.
VACATED AND REMANDED WITH INSTRUCTIONS
HERLONG, District Judge, concurring in the result:
I concur in the result to reverse the district court but on a different
basis. Barker asserts that the Rooker-Feldman, infra, doctrine
divested the district court of jurisdiction. I agree. While I also agree
with the majority’s reasons for reversal, I believe that the question of
jurisdiction must first be resolved. See Brown & Root, Inc. v. Breck-
enridge, 211 F.3d 194, 202 (4th Cir. 2000) (stating that the Rooker-
Feldman doctrine is jurisdictional). Because it appears that the
Rooker-Feldman doctrine divested the district court of jurisdiction, I
would reverse on that ground.
The Rooker-Feldman doctrine provides that "a United States Dis-
trict Court has no authority to review final judgments of a state court
in judicial proceedings." District of Columbia Court of Appeals v.
Feldman, 460 U.S. 462, 482 (1983); see also Rooker v. Fidelity Trust
Co., 263 U.S. 413 (1923). In making this determination, one pivotal
question is whether "the federal plaintiff seeks to set aside a state
court judgment or whether he is, in fact, presenting an independent
claim." Brown & Root, 211 F.3d at 202 (internal quotations omitted).
The facts in this case and Brown & Root are essentially the same.
Like in Brown & Root, the Federal Arbitration Act, 9 U.S.C. § 1 et
seq., was raised before the California state court and the state court
decision preceded the federal court decision. See J.A. 931, 964, &
1111. Therefore, the Rooker-Feldman doctrine appears to divest the
district court of jurisdiction. As such, I would reverse on the alternate
ground that the district court lacked subject matter jurisdiction.
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